Financial literacy

Financial literacy a must for SME growth

The Institute of Public Accountants has advocated for a greater focus on improving financial literacy skills among the small business sector to ensure future viability and growth.

The recommendation stems the IPA’s second Australian Small Business White Paper produced in partnership with the IPA Deakin SME Research Centre.

IPA chief executive Andrew Conway said the government should make funding for vocational education courses to enhance SME owners’ financial literacy a priority.

“We also support the notion that practical education in areas encompassing business strategy and management to form part of the educational offerings,” Mr Conway said.

“Incentives for further financial literacy and SME business management education, such as tax deductibility for educations costs, should be offered to SME owners via the tax system.

“Registered training organisations could partake in government incentives and play a more active role in encouraging SME operators to improve their knowledge in business management and finance.”

It is also a view shared by Duca Advisors founding director Daniel Moore, who said in June that the onus shouldn’t fall on accountants to educate SMEs around their obligations when holding an Australian Business Number (ABN).

He said many people go out and get an ABN and start working straight away with no idea as to their tax obligations and fall into trouble when they’re found out 18 months down the track.

“Then they’ve got all these questions, or 12 months down the track they’ve earned $150,000 and they owe a whole massive amount of tax. They’ve made money and they’ve spent it and they haven’t paid a single cent in tax or GST. It’s really hard for a business to recover from that,” Mr Moore said.

In August, ASIC commissioner John Price announced the corporate regulator’s Small Business Strategy 2017-2020, detailing its three strategic priorities to “engage, assist and protect”.

Mr Conway welcomed the move, highlighting the need for small businesses to be afforded greater support in terms of financial literacy.

“It is very pleasing that ASIC is placing due attention on small business through its small business strategy with the focus on assist, engage, protect,” he said.

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