News

 

BUSINESS ADVISORY NEWS FOR ACCOUNTANTS

Be Proactive – Identify Grants For Your SME Clients!
There are 13 reasons why accountants should identify grants for SME clients:

1.    To show your clients you care.

2.    Your clients pay taxes – shouldn’t they have the opportunity to participate in the billions of dollars’ worth of grants and incentives that are available from the Federal, State and Territory governments?

3.    Saves embarrassment if your clients find out about a grant from a competitor (or overhears or reads about it) and then comes to you in a rather disgruntled state, wondering how one of their competitors got a grant?

4.    Helping your client add value to his/her business by undertaking something new, which normally happens when a business receives a grant.

5.    Improve your client’s financial performance by receiving grants or incentives to which they might have an entitlement (eg Research and Development Rebate, Export Market Development Grant).

6.    Help your client navigate financial difficulties following disasters – assistance with disaster grant applications that are applicable to primary producers and small businesses.

7.    Help your accountancy business retain growing business clients.

8.    Develop potential business advisory work, because this is the type of activity which most grants involve, with 50% of your fees being paid by the government for activities such as:

  • preparing business budgets
  • cashflow forecasts
  • business plans
  • debtors’ system reviews
  • human resources systems, etc

9.    Help your team add variety and interesting work to their tasks.

10.  Assist your clients to work with a wider range of professionals, to improve their business operations and improve their vision and knowledge of business activities such as:

  • factory/workshop layouts
  • lean management
  • workplace health and safety
  • marketing
  • sales
  • information technology
  • capital raising

11.  Service your clients in-house without them having to consult other advisers who might ‘encourage’ your clients to get all of their services elsewhere.

12.  Enables you to act as the ‘project manager’.

13.  Helps your firm to ‘replenish revenue streams’, as advocated by Deloitte in ‘Digital disruption – short-fuse, big bang?’.


What are the key characteristics of grants?

  • Entity types
  • Number of employees
  • Years in business
  • Location
  • Is the business registered for GST?
  • Export activities?
  • Import of products?
  • Research and development activities?
  • Develop new products, processes or services?
  • Type of industry
  • Turnover

These are some of the key issues that are taken into account in determining grant eligibility.

New grants issued by the Australian government
The Liberal government has released details of a new grant, the Entrepreneurs’ Infrastructure Program, which commenced a phase-in period from 1 July 2014, with the release of the Business Evaluation Program.

Business Evaluation Program
After a business has undertaken the business evaluation, which is performed by a business consultant employed by the government free of charge, the business could be eligible for a Business Growth Grant to undertake specific activities that have been identified as beneficial to the business in the business evaluation.

This program is targeted at businesses in 10 selected industry groups which can receive assistance of up to $20,000 on a 50% funding basis, to undertake a range of services that could improve the business’ operations.

The industry sectors that apply are:

  • Defence
  • Energy, Water and Waste Management
  • Freight and Logistics
  • Infrastructure Related Construction
  • Information and Communications Technology (ICT)
  • Manufacturing and Manufacturing Related Services
  • Medical and Pharmaceutical
  • Professional Services
  • Resources Technology (Mining, Oil and Gas)
  • Creative Industries
  • Tourism (some sectors)
  • All businesses that operate in remote or very remote locations


Research Connections
The Entrepreneurs’ Infrastructure Program has announced that it will be phasing in the commencement of ‘Research Connections’ from September 2014.  This will offer a grant of up to $50,000 to assist eligible businesses to obtain assistance from universities and research organisations, to assist in the development of projects within their business.

Commercialising Ideas
The Entrepreneurs’ Infrastructure Program’s ‘Commercialising Ideas’ program is scheduled to commence in November 2014.  This program will offer assistance to businesses that have developed new products, processes or services, which require funding to prove the concept and/or develop business plans, budgets, cashflow forecasts and financing models for submission to Business Angels and venture capital organisations.  The funding of up to $250,000 will be available on a 50/50 basis.

There are many other grants and incentives, including:

  • Export Market Development Grant
  • Research and Development Rebate
  • Apprenticeship Employment Rebates – some of which are only available if the particular trade is listed in the National Skills Needs’ List.


The Federal government has also announced that it intends to introduce new grant programs in early 2015, primarily centred on skills development and clean energy.


What does this mean to accountants?
The challenge accountants have is deciding on additional services that could be offered to ‘replenish revenue streams’.  There is no doubt that there are enormous challenges confronting accountancy businesses, primarily the firms that are concentrating on the preparation of financial accounts and income tax returns.

Being proactive in offering a service, to assist your clients to apply for appropriate government grants, is a service not only to assist your clients, but also to assist your firm to ‘replenish revenue streams’.

However, to process all of these grants means there’s a lot of work to be done and many of you will not have the time or indeed the knowledge on the various government grants to proactively go about identifying grants for your individual clients.

There is no doubt that many accountants are also fearful about referring their clients to other organisations to assist in seeking out grants, in case some of those other organisations ‘encourages’ your clients to go elsewhere for accounting and taxation advice.

One way to be proactive without having to ‘re-invent the wheel’ and learn all of the intricate details about individual government grants, is to utilise external services that have already been developed to assist accountants identify government grants.


Accountants can assist
If there was a way you could offer an outstanding government grants service to your clients, without having to refer your clients to external consultants, you would want to know about it wouldn’t you?

The reason that I mention this is that ESS BIZGRANTS, part of the ESS BIZTOOLS’ group, has developed a full range of services, to assist accountants to identify government grants for their clients.  The most recent version of ESS BIZGRANTS is to be released to accountants in a special webinar on Wednesday 30 July 2014 at 12pm AEST.

The ESS BIZGRANTS’ system is an easy-to-use website, utilising cloud technology, which enables you to perform all of the tasks in-house, so you can retain your status as the ‘key adviser’ to your clients.  It will take approximately four minutes to enter your client’s basic information and another five minutes to answer some questions on specific grants that have been identified for which your clients might be eligible.

ESS BIZGRANTS then produces a professional-looking grant report, with your firm’s name and your client’s name, which contains a synopsis of the grants which have been identified for which your client is potentially eligible to apply.

ESS BIZGRANTS includes a direct link to the applicable government department so you can view the application form and any other information you require about the grant.  You also have access to ESS BIZTOOLS’ papers that have been produced on each individual grant that’s included in ESS BIZGRANTS.

You can have access to this system 24/7 for less than $9 per week plus GST.  We believe there is potential for at least 100 grants in every accountancy business in Australia and, in some accountancy businesses, there’s potential for 1,000s of grants for SME clients.

David Smith, managing director of Smithink 2020 and former president of the Institute of Chartered Accountants, has made the following comment:

“This is a tool that should reside in every accountant’s office.  Few accountants are aware of the grants available to their clients.  It’s a minefield of Federal, State, local and special purpose grants that seem to change almost daily.  ESS BIZGRANTS has done the hard work in bringing together all this information in an easy-to-use application.  If an accountant wants to make a client happy, get them some government money!  ESS BIZGRANTS is the tool that can quickly help accountants quickly assess whether a client might be able to access a grant.”

ESS BIZTOOLS and ESS BIZGRANTS are committed to delivering resources to assist accountants add value to their SME clients.  We’ve produced over 1,500 articles on various aspects of small business operations, which our subscribers to ESS BIZTOOLS can re-badge with their names and send to their SME clients and prospects.

A complimentary copy of one of these articles, ‘Business Growth Grants Program’, is attached with this transcript.

To receive future editions in the ‘Business Advisory News for Accountants’ series, I invite you to subscribe, FREE of charge, to our ESS BIZTOOLS – Business Advisory News for Accountants – Podcasts page on iTunes.

If you have any questions or, if you have suggestions on future items to be covered in Business Advisory News for Accountants, wherein we will look at ways and means that accountants can be more effective by offering a range of business advisory services to their clients, please do not hesitate to email me at peter@essbiztools.com.au .

  
SHOULD ACCOUNTANTS OFFER ADVICE TO SMEs ON GRANTS?

We believe the answer is yes.

Most small/medium enterprise business operators have very little idea of what grants are available from Federal, State and Territory governments.

Grants range from Research and Development Tax Incentive (available for all companies who have spent in excess of $20,000 in a year on research and development) to Entrepreneurship Infrastructure Program Commercialising Ideas grants of up to $250,000.

There are all types of grants in-between, as well as incentives and loans. Some of the grants, loans and incentives include:

  • Apprenticeship Employment Grants
  • Export Market Development Grant, to encourage exporters to develop new markets overseas
  • Corporate Uniforms
  • Business Growth Grant which offers grants to a wide range of industries including:
    • Defence
    • Energy, Water and Waste Management
    • Freight and Logistics
    • Infrastructure Related Construction
    • Information and Communication Technology
    • Manufacturing or Manufacturing Related Services
    • Medical and Pharmaceutical
    • Professional Services (some segments)
    • Resources Technology
    • Creative Industries
    • Tourism (some sectors)

The basic criteria is that the grant will be used to improve the business’ economic performance.

Many small/medium enterprises do not access these government grants, or alternatively become aware of them when it’s too late.

A lot of small business operators are operating their businesses in the wrong corporate entity to be able to source government grants. This is where their accountant can assist them. The accountant needs to be promoting to their clients, that they have an interest in identifying government grants for which they may be suitable.


GRANT IDENTIFICATION

  • Firstly, what we believe will be the most widely used aspect of accountants identifying government grants, is to review a client’s eligibility for government grants, as part of the end of year financial accounts/income tax return preparation process. Based on the previous year's performance, the client can then be made aware of any government grants for which they may be eligible; and
  • Secondarily, identification of government grants could be undertaken by an accountancy business, on a one-on-one basis, answering a particular enquiry from a client to see if there are any grants that would suit that client’s business activity; or
  • Thirdly, an accountant may have noticed that a client has already secured a government grant and therefore decides to check on the eligibility of other clients, operating similar businesses, to see whether they could also apply for the government grants. 

 

 ESS BIZGRANTS - IS IT WORTH FINDING OUT ABOUT GOVERNMENT GRANTS?

Many accountants know very little about government grants. Government grants represent a cash injection to help their SME clients receive a significant advantage, whilst at the same time, accountants can probably benefit by earning fees from some grant projects.

Accountants are normally familiar with the research and development taxation incentive but tend to have little knowledge of some of the other grants which are designed to assist SMEs carry out a wide range of business development activities. Grants available include:

  • research;
  • commercialisation of prototype development;
  • improvement to business performance; and
  • assistance for export marketing.

The R & D Tax Rebate comprises of two components:

  • for companies with turnovers under $20M; and
  • for companies with turnovers over $20M.

An attractive tax rebate of 43.5%, of the eligible R & D expenditure, which can be payable in cash 30 days after lodgement of company’s income tax return, is available for eligible companies whose turnovers are under $20M.

For companies with turnovers over $20M, the rebate is 38.5% of eligible R & D expenditure, subject to a minimum expenditure of $20,000. The rebate is not payable in cash.

Companies must register annually with AusIndustry by 30th April in the following year or the date of lodgement of the company’s income tax return.

 

EXPORT BUSINESSES

If you have clients who are exporting products to most countries in the world (excluding New Zealand, Iran and North Korea):

  • with turnovers of less than $50M; and
  • who have spent in excess of $20,000 on export market development activities (and there are thirteen distinct headings and numerous subheadings relating to the definition of export market development)

then your client can potentially claim 50% of the export market development expenditure (to a maximum amount of $150,000).

 

APPRENTICESHIPS

There are eight different categories of apprenticeship incentive payments for the employment of new apprentices. Five of these categories are targeted at apprentices working in industries listed in the National Skills Needs' List. The other three apprenticeship grants are available for all industries relating to mature-aged apprenticeship (over 45), apprentices with disability and apprentices in the nursing, aged and child care industries.

Each of the State governments have entered into agreements with the Australian government for natural disaster grants, assistance and loans to help eligible primary producers and small businesses overcome problems from natural disasters (e.g. cyclones, floods, fire etc).

Assisting small/medium enterprise clients to identify government grants, or government assistance packages, is a great way for accountants to add value to their client relationship.

ESS BIZGRANTS has been developed, as a cloud technology product, to give accountants a "tool" to assist them in identifying suitable grants for which individual clients can apply.

You can view "8 Case Studies" of the grant process at www.essbizgrants.com.au.

 

SUBSCRIPTIONS TO ESS BIZGRANTS AVAILABLE

Accountants can now subscribe to ESS BIZGRANTS, a cloud technology product that has been developed as a “tool” to assist them to identify government grants, loans and assistance that might be suitable for individual small enterprise clients.

ESS BIZGRANTS has been developed by ESS BIZTOOLS Pty Ltd and Real Advantage Solutions and includes a wide range of government grants that are targeted at small/medium enterprises.

“We set out to assist accountants to identify government grants suitable for individual small/medium enterprise clients, without the accountant having to do all of the research and spend hours trawling the net, trying to locate grants that might suit a client” said Mr Peter Towers, Managing Director of ESS BIZTOOLS Pty Ltd.

A 12 month subscription to ESS BIZGRANTS costs $450 (plus GST) for 24/7 access, irrespective of the number of users within the subscriber's office.

 

IDENTIFYING GOVERNMENT GRANTS FOR SMALL/MEDIUM ENTERPRISES - A CHALLENGE FOR ACCOUNTANTS

Introduction:
There are many Australian and State government grants for small/medium enterprises. It is estimated that the total business grant market in Australia is in excess of $5B annually.

There are major problems for small/medium enterprises relative to government grants, including:

  • identifying grants for which they may be eligible
  • preparing the application

Grant Activities:
Grants cover a wide range of activities, from:

  • research and development
  • technology being commercialised
  • business improvement strategies for established businesses in specific industries
  • disaster recovery grants and loans
  • assistance for exporters - Federally and most States
  • apprenticeship employment incentives
  • free material of interest to small/medium enterprises from the Australian Bureau of Statistics
  • free exposure in the international market
  • state-based incentives to encourage business development in nominated locations and/or specific industries
  • ability to have business details included in a nation-wide database of businesses available for work on major projects
  • deferment of import duty and GST on imports that will be exported within 12-months
  • free mentoring and coaching on business matters
  • most States have special mentoring programmes to assist women in business
  • some grants have different eligibility requirements for businesses located in Inn Metropolitan Areas, Outer Metropolitan Areas, Regional and Remote Locations

Most grants require some contribution from the grant beneficiary - normally 50%. Virtually all grants are not repayable, but most are treated as income for income tax purposes. This can cause some problems if the grant funds have been spent primarily on capital expenditure.

Grant Eligibility:
Grant eligibility varies:

  • location
  • entity type
  • sales
  • years in business
  • number of employees

Challenge for Accountants:
Government grants present an interesting challenge for accountants. Many accountants admit that they do not know much about government grants, other than research and development.

As accountants confront the challenges of the changing marketplace (see Prediction of Accountancy Business Evolution 2014-2017 and Vision for the Future of Accountancy Businesses) one of the new services that accountants could introduce is proactive assistance for small/medium enterprise clients to identify government grants suitable for them.

Identification of Grants for Individual SMEs:
Identification of suitable government grants can be undertaken by accountants however, in most cases, this will be time consuming and can be very frustrating. An alternative is to use Version 2 - ESS BIZGRANTS’ cloud technology software which facilitates the identification of grants suitable for individual small/medium enterprises.

ESS BIZGRANTS could be used as:

  • part of the end of financial year review, wherein the client data has been entered into ESS BIZGRANTS and a report is prepared for discussions with the client. This is a very proactive way of identifying potential grants for the client
  • seeking the client's instructions as to whether to proceed with completion of the grant application form and obtaining additional information

An alternative is to enter client details at any time during the year to determine if that particular client might be eligible for a government grant.

Sample of Grant Report:
ESS BIZGRANTS produces a "Potentially Eligible Grant Report", a sample of which is attached. This lists the government grants for which the client may be potentially eligible.

If you think it will assist the client in understanding the grant procedures, you could use the grant "ToolKit " within ESS BIZGRANTS to produce additional supporting information on a particular grant. (e.g. an ESS BIZTOOLS' paper on that particular grant which gives a detailed summary of the grant, application process, reporting obligations etc., and, in some cases, checklists on particular grants are available).

ESS BIZGRANTS allows you to "Apply Now" by clicking on the link to the relevant government website to view the application form.

Accountants' Opportunities:
Accountants can play more than a passive role relative to grant identification. If they wish, there are opportunities for accountants to be involved in:

  • application preparation
  • liaison with the government grant officers
  • actually undertaking work projects, including:
    • preparation of business plans
    • budgets and cashflow forecasts
    • research and development professional assistance relative to registration with AusIndustry, maintenance of
    • records for the research and development claim, inclusion of the claim in the company's income tax return.

The opportunities for accountants from involvement in government grants consulting work include:

  • identification and mentoring with clients in relation to potential grants
  • assisting clients in the application process
  • submitting a quotation for the work you are comfortable in undertaking; and
  • then performing the professional task (if accepted by the client and the government department) as part of the grant-funded work process.

Being proactive in offering a government grant service to clients, as part of the development of a business advisory service strategy for an accountancy business opens new added value services for accountants to provide.

If you would like to read the "Prediction of Accountancy Business Evolution 2014-2017" and "Vision for the Future of Accountancy Businesses" please email us - peter@essbiztools.com.au.

Grants Suitable for SMEs:
A summary of some of the government grants suitable for small/medium enterprises:

  • Research & Development Incentive - Turnover Under $20M
  • Research & Development Incentive - Turnover Over $20M

Commercialisation Ideas:

  • Identify and develop the skills and knowledge required to commercialise idea, product or service
  • Business/Commercialisation Plan
  • Intellectual Property Strategy
  • Proof of Concept work to establish the commercial viability of a new product or service, including prototyping

Business Growth Grant:

  • Defence
  • Energy, Water and Waste Management
  • Freight and Logistics
  • Infrastructure Related Construction
  • Information and Communication Technology
  • Manufacturing or Manufacturing Related Services
  • Medical and Pharmaceutical
  • Professional Services (some segments)
  • Resources Technology
  • Creative Industries
  • Tourism (some sectors)