In worrying news for the small business sector, insolvency levels have surged to their highest point in nine years.
Insolvency levels in the March quarter were 41.1% higher than the year before and 145.7% higher than the year before that, according to the latest data from credit bureau Equifax.
Business owners in the construction and hospitality sectors are doing it particularly tough, because they’re also much more likely to be in mortgage arrears than the average consumer.
“The ongoing growth in insolvencies raises questions about the survivability of many businesses – particularly those, like the SMEs and sole traders in construction and hospitality, that are facing financial stress in both their professional and personal lives,” Equifax said.
If your business is struggling to pay its tax bill in full and on time, the Australian Taxation Office (ATO) says you may be eligible to set up a payment plan. This option helps businesses manage their financial obligations more effectively while avoiding penalties.
“If you owe $200,000 or less, you may be able to do this yourself using online services. If you can’t, or you owe more than $200,000, contact us or your tax professional to discuss your options. It’s important that you pay any overdue debt as soon as possible,” the ATO says. This guidance underscores the importance of timely debt repayment and seeking appropriate help based on individual financial circumstances.