As many of us know, the independent Government body that is the Australian Securities & Investments Commission (ASIC) plays a key role in regulating the business sector. It’s a necessary body to have, ensuring companies are kept in line and consumers, investors and creditors are protected, but it’s the compliance aspects that can easily catch businesses out.
Registered companies with ASIC need to ensure that their business documentation are up to date and forms constantly lodged on time in order to avoid fees. Time limit-based penalties include late payment fees, late review fees and late lodgement fees. Up to one month late and you’ll be slapped with a $74 late fee. Pass a month and you’ll have to fork out $308. It adds up fast.
All companies have an annual review date, which is usually the anniversary of their incorporation. Keep an eye on this renewal date especially– it will cost you if you don’t.
As a credit bureau, one common mistake that I see far too often is businesses that forget to pay their annual business registration fee for a variety of simple and seemingly innocent reasons, such as not notifying ASIC of an address change, which can lead to all notices going to an old address. Without realising, ASIC can begin proceedings, issuing an insolvency notice to wind them up. A bank or supplier that reviews that businesses credit file or receives a monitoring alert of a status change could reasonably interpret the insolvency notice as a sign that the business is in financial difficulties. The roll-on effect can be quite detrimental.
Too many small businesses are simply unaware of how many elements they need to keep in mind, especially when it comes to compliance. It’s imperative records are kept in order and as detailed as possible, with financial statements, cash records, work-in-progress records, job/customer files, business correspondence and much more falling under the “financial records” umbrella mentioned by ASIC.
Make sure ASIC is notified of all business changes. Changes relating to registered office, principal place of business and company share issue are required to be shared within 28 days, while changes relating to the location of a company’s share register is to be shared within a week. Be sure to read this checklist for more information.
Also, another factor that I cannot stress highly enough, if you send through the required ASIC documents and receive a ‘return of particulars’ from ASIC, do not take it lightly. Companies are given two months to resolve the incomplete or incorrect information in question, or to shoot through the form declaring the information is actually correct. What happens if you ignore it? ASIC states: If you fail to respond in time, we may consider commencing civil or criminal action against your company, including deregistration.
This is but a small reminder of what to keep at the front of your mind as a business. Registering business names, ensuring your company is solvent, keeping ASIC informed of director details, the list goes on. Have someone in your office double-checking that you tick off the right boxes to avoid nasty surprises.
For more information, talk to your accountant or go through the ASIC website with a fine-tooth comb to keep yourself covered.
About the Author:
Colin Porter is the publisher of Dynamic Business and the founder and MD of credit reporting bureau, CreditorWatch. He has over 20 years experience as a business owner, specialising in general small/medium business issues, cashflow, credit management and online business. Follow CreditorWatch on Facebook, Twitter and LinkedIn.