Running an e-commerce business in Australia can be both exciting and challenging. But when ATO (Australian Tax Office) debt starts piling up, it can feel like you’re fighting an uphill battle. The good news is that there’s a legal solution that can help you regain control over your finances without shutting down your business: the Small Business Restructuring Process (SBRP).
In this blog, we’ll walk you through how the SBRP can help your e-commerce business reduce and restructure its ATO debt, allowing you to stay operational and continue growing. Let’s dive in.
How One E-commerce Business Used the SBRP to Overcome ATO Debt
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Let’s look at an example of how the Small Business Restructuring Process (SBRP) helped an Australian e-commerce business overcome ATO debt and continue growing.
Meet Sarah: An E-commerce Entrepreneur Facing ATO Debt
Sarah is the founder of a thriving e-commerce store that sells eco-friendly home goods across Australia. After a few successful years, her business started to struggle due to Covid, increasing competition, rising marketing costs, and a dip in consumer spending. Unfortunately, as her revenue slowed, Sarah fell behind on her tax obligations, and soon her ATO debt grew to over $250,000.
The stress of managing the business, fulfilling orders, and dealing with mounting tax debts made Sarah fear that she would have to shut down her business entirely. The ATO had even sent several warning letters, leaving her worried about potential penalties or legal actions.
How the SBRP Saved Sarah's Business
Just when Sarah thought she had no options left, a friend told her about the Small Business Restructuring Process (SBRP), a legal mechanism that could help her negotiate and restructure her debt. After consulting with a restructuring expert, Sarah discovered that her business met the eligibility criteria for the SBRP, and she decided to move forward.
Together with a licensed restructuring practitioner, Sarah was able to create a formal restructuring plan. The plan allowed her negotiate her ATO debt down to 20 cents on the dollar and to repay her ATO debt in manageable installments over a 12-month period while continuing to run her business. Importantly, Sarah remained in control of her business throughout the process, avoiding liquidation or voluntary administration.
The Results
Thanks to the SBRP, Sarah was able to:
- Reduce her immediate financial burden by negotiating with the ATO to lower her monthly payments.
- Stay in business and continue fulfilling orders, growing her customer base, and generating revenue.
- Avoid penalties or legal action from the ATO, protecting her business from closure.
Today, Sarah’s business is back on track, and she has paid off a significant portion of her debt. With a renewed focus on scaling her business, she is confident about the future.
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Interested in learning more about how the SBRP can help your e-commerce business reduce ATO debt? Contact us to support your growth and take the stress out of the ATO Debt!
Small Business Restructuring Process (SBRP)?
What is SBRP?
The Small Business Restructuring Process (SBRP) is a legal framework introduced by the Australian government in 2021 to help small businesses facing financial hardship restructure their debts, including ATO debts. It allows business owners to develop a restructuring plan, work with a restructuring practitioner, and avoid more drastic measures like liquidation or voluntary administration.
This process is particularly beneficial for e-commerce businesses, where financial flexibility is crucial for day-to-day operations and growth.
How Can the SBRP Help E-commerce Businesses?
f you’re an e-commerce business owner, the SBRP offers several advantages when it comes to managing ATO debt:
1. Legally Reduce and Restructure ATO Debt
One of the most attractive benefits of the SBRP is that it allows you to negotiate with the ATO and other creditors to restructure your debt. This means you can work out a payment plan that fits your business’s cash flow, making it easier to pay off what you owe without halting your operations.
2. Stay in Control of Your Business
Unlike liquidation or voluntary administration, where you may lose control of your business, the SBRP allows you to remain in charge. You can continue running your e-commerce store while addressing your financial obligations in a structured way. This means you don’t have to sacrifice your business to resolve your debt issues.
3. Avoid Bankruptcy or Insolvency
By opting for the Small Business Restructuring Process, you avoid the severe consequences of bankruptcy or insolvency, both of which can have long-term impacts on your personal and professional life. The SBRP offers a lifeline to stay solvent while addressing your financial challenges in a legal and transparent manner.
Eligibility for the Small Business Restructuring Process
Before you can apply for the SBRP, your business must meet certain criteria:
- Your total liabilities must not exceed $1 million (including ATO debt).
- Your business must be solvent and able to pay ongoing debts.
- Your tax lodgements, employee entitlements, and other regulatory obligations must be up to date.
If you meet these criteria, you can start the process with the help of a restructuring practitioner, who will guide you through developing a restructuring plan and negotiating with the ATO and other creditors.
How Much Can The Debt Be Reduced?
The SBRP is a game-changer for e-commerce business owners struggling with ATO debt. Here are some of the key benefits:
- Reduced financial pressure: With a manageable payment plan, you can focus on running your business rather than worrying about ATO penalties.
- No business shutdown: You can continue to sell products and grow your e-commerce business while paying down your debt.
- Clear path to recovery: The structured approach of the SBRP gives you a clear roadmap to financial recovery, rather than an uncertain future.
- Reduction of Debt up to 85%!: We have seen SBRP that have resulted in a reduction of debt up to 85%. This is on a case by case basis.Â
Steps to Apply for the SBRP
If you’re ready to take advantage of the Small Business Restructuring Process, here are the basic steps:
Engage a Restructuring Practitioner
You’ll need to hire a qualified restructuring practitioner who will assess your situation and help develop a plan to manage and reduce your debts. If you need help contact us today!Develop a Restructuring Plan
The practitioner will work with you to create a detailed plan that outlines how you’ll repay your creditors, including the ATO, over time. The plan must be realistic and show how your business can meet its financial obligations.Submit the Plan to Creditors
Once the plan is ready, it’s submitted to your creditors (including the ATO) for approval. If approved, you can begin making payments according to the new schedule.Continue Running Your Business
The best part of the SBRP is that you can keep your e-commerce business running as you implement the restructuring plan, giving you the breathing room to focus on growth.
Take Control of Your ATO Debt with the SBRP
If your e-commerce business is struggling under the weight of ATO debt, the Small Business Restructuring Process offers a legal, structured, and manageable way to reduce and restructure your debts. By taking advantage of this process, you can regain control of your finances, avoid bankruptcy, and keep your business on track for growth.
Don’t wait for ATO enforcement actions — take the proactive step of exploring how the SBRP can benefit your business. Our team of experts is ready to guide you through the process and help you secure a brighter financial future for your e-commerce store.
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