What should you check before acting on business restructuring advice?
Why you must check restructuring advice before you act
Restructuring can change who controls the business, the company’s tax and registration obligations, and the rights of creditors and landlords. For Australian small and medium businesses these are high stakes decisions. Government guidance explains why planning and clear choices matter when recovery is the goal, not just cost cutting. See the Service NSW overview on small business restructuring and the business.gov.au summary on changing business structures and types for the formal context.
Who this checklist is for
This article is for owners, directors and trustees who are considering any form of reorganisation: informal internal changes, a change of entity, or the formal Small Business Restructuring process. If you are already subject to formal insolvency notices, seek specialist legal or registered insolvency advice immediately.
What this article will not do
This is not legal or insolvency advice. It lists practical decision checks and common mistakes to help you triage the situation and prepare focused questions for an adviser. For eligibility rules and formal requirements consult ASIC and the government guidance linked above.
Check 1: Is formal Small Business Restructuring the right path for your company?
Small Business Restructuring, often called SBR, is a formal route that can allow eligible companies to remain in control while preparing a plan to deal with debts under a registered restructuring practitioner’s oversight. ASIC explains the restructuring plan framework and the practitioner role. Advisers note SBR is normally considered when a company is insolvent or likely to become insolvent and when a credible plan to restore viability exists. Before you act, confirm whether SBR fits your circumstances and whether you can present a viable plan to creditors.
Quick SBR eligibility markers
- There must be a solvency concern or a credible risk of insolvency.
- You need the ability to prepare realistic financial forecasts and repayment proposals.
- A registered restructuring practitioner must be appointed to file the formal plan and manage creditor engagement.
Refer to ASIC for the formal requirements and to an adviser experienced with SBR for a tailored assessment.
What to expect if you start SBR
Starting SBR means engaging a registered practitioner, preparing a restructuring plan, and negotiating with creditors. It also triggers specific notifications and timeframes under the Corporations Act. Expect closer creditor focus than with an informal restructure, but also a legal framework that can help bind creditor agreements if the plan is approved.
Check 2: Have you verified the tax, BAS and STP implications?
Restructuring rarely removes existing tax or ATO obligations. Changing entity type, transferring assets, or pausing operations can trigger GST, PAYG withholding, Super Guarantee and income tax consequences. Business.gov.au explains that moving from a sole trader to a company or altering ownership affects registrations and tax obligations, so confirm the tax consequences before you agree to any plan.
Important tax, BAS and STP questions to run now
- Do you have outstanding BAS, PAYG withholding or ATO debts? These generally survive a restructure.
- Will GST registration, ABN details or GST reporting periods change if you change entity?
- How will Single Touch Payroll reporting continue during a restructure and who will lodge STP data?
- Are there PAYG instalments, fringe benefits or payroll tax liabilities that require immediate attention?
If you are unsure how a proposed change affects tax reporting or debt treatment, contact the ATO or get an accountant to check the timing and lodgement consequences. Service NSW highlights that early clarity reduces downstream penalties and compliance risks.
Check 3: How will creditors, leases and contracts respond to restructure?
One common and costly mistake is to assume contracts will continue unchanged. Many supplier agreements, loan facilities and commercial leases include change of control clauses, termination rights, or require landlord consent for assignment. If the business or directors have provided personal guarantees, those guarantees may remain enforceable even if the trading entity changes.
Questions to ask about guarantees and security
- Which creditors hold secured claims against company assets?
- Who has personal guarantees and will those guarantees be called if a restructure fails?
- Do suppliers or the landlord have rights to terminate or require consent on assignment or change of control?
For formal plans, ASIC and business.gov.au describe creditor voting and the need to disclose secured versus unsecured claims. Map your creditor landscape before you act and get legal advice on specific contract clauses.
Check 4: Do you have robust cashflow forecasting and realistic viability tests?
Poor forecasting is a leading cause of failed restructures. Practical restructuring starts with simple, rigorous numbers: a short cashflow runway, credible scenarios, and a plan to close the funding gap. Advisers emphasise a 13 week cashflow, stress testing for slower receipts or loss of a major customer, and clear break even assumptions.
Financial facts to prepare now
- Last three months of bank statements and a 13 week cashflow forecast.
- List of weekly creditor payments including secured creditors and due dates.
- Projected cash inflows for best, base and worst cases and the minimum runway to maintain trading.
If forecasts show no realistic pathway to positive cashflow even after restructuring, alternatives such as sale of the business, a controlled wind down or formal insolvency may be more appropriate.
Check 5: Have you assessed superannuation and employment obligations?
Unpaid Super Guarantee and employee entitlements do not disappear because you restructure. Super obligations accrue and can attract penalties and interest, and changes to who employs staff affect payroll reporting under Single Touch Payroll. If trustees or directors change roles, you should also consider SMSF compliance implications where relevant.
Payroll and STP continuity checklist
- Confirm all employer superannuation has been processed and reconciled.
- Check that STP reporting will continue without data gaps during any change of payroll provider or entity.
- Review leave, redundancy and long service accruals and how they transfer if employees move to a new entity.
If you administer an SMSF or employ staff through related entities, get specialist tax and super advice before making structural changes to avoid unintended compliance breaches.
Check 6: How to vet restructuring advice and choose the right adviser
Choosing the right adviser changes outcomes. Not all accountants or advisers have SBR or formal restructuring experience, and insolvency work requires registered practitioners for certain roles. ASIC publishes information about restructuring practitioners and their functions. Ask direct questions and seek refereed experience.
12 questions to ask a prospective adviser
- Have you handled SBR or creditor negotiation cases like ours? Ask for anonymised examples.
- Are you a registered restructuring or insolvency practitioner, or will you work with one?
- Who will lead the engagement and who is responsible for deliverables?
- What information do you need immediately and what is the likely timeline?
- How do you charge for planning, negotiations and implementation?
- Which specialist advisers, such as legal, tax or insolvency, do you partner with?
- How will you communicate with creditors and stakeholders?
- Can you provide client references for similar restructures?
- How do you handle conflicts of interest regarding existing creditor relationships?
- What are the realistic outcomes we should expect?
- How will you coordinate STP, BAS and ATO lodgements during the process?
- Do you provide a written engagement plan and cost estimate before work begins?
Documents to bring to the first meeting
- Recent BAS and ATO notices, bank statements and aged creditor and debtor ledgers.
- Payroll and STP reports, superannuation reconciliation and employment contracts.
- Loan agreements, security documents and signed guarantees, and principal supplier and lease contracts.
Realistic outcomes and owner objections
Owners often worry about cost, loss of control, reputation and supplier reaction. Honest answers matter. While SBR can preserve director control during plan development, it involves closer creditor scrutiny and fees for practitioners. Early professional help can reduce overall cost by preventing enforcement or costly late lodgement penalties. Service NSW notes that planning is central to recovery, and advisers experienced in small business restructuring can help balance trade offs.
Short checklist to run now and what to bring to a consultation
Before you call an adviser, complete this quick checklist so the meeting is productive:
- 13 week cashflow and recent bank statements.
- Latest BAS statements, ATO letters and payroll/STP reports.
- List of creditors with secured claims and any personal guarantees.
- Key commercial contracts and lease documents.
- Your objectives: sale, refinance, continuation under a plan, or a controlled exit.
For a structured conversation about options and next steps, start with a free consultation. Advanced Accounting Taxation & Business Services explains its approach and offers a free initial consult and package based onboarding to help you scope a practical plan. Read more on the firm’s blog about business advisory decision making and then arrange a consultation on the official site at the official website.
Frequently asked questions
Am I eligible for the Small Business Restructuring process?
Eligibility depends on your company’s circumstances and formal criteria set by regulators. ASIC describes the SBR framework and the role of a registered restructuring practitioner. Consult ASIC or an experienced adviser to confirm eligibility for your situation.
Will restructuring eliminate ATO debts, BAS liabilities or creditor claims?
No. Restructuring can change how debts are managed but does not automatically remove tax, BAS or secured creditor claims. Business.gov.au warns that changing your business structure affects tax registrations and obligations, so get specific tax and ATO advice before acting.
When should I contact a registered insolvency or restructuring practitioner?
Contact a registered practitioner once you suspect insolvency risk or when you need a formal plan that involves creditor engagement. If you need to start SBR, a registered practitioner must be appointed. See ASIC for guidance on the practitioner role and obligations.
How will a restructure affect my payroll, Single Touch Payroll reporting and superannuation obligations?
Restructuring can change employer responsibilities and STP reporting arrangements. Superannuation and PAYG withholding liabilities remain while STP reporting must continue without gaps. Prepare payroll reconciliations and check with your accountant to ensure continuity and compliance.
What documents should I bring to a first restructuring consultation?
Bring recent BAS and ATO notices, bank statements, aged creditors and debtors, payroll/STP reports, loan agreements, guarantees, lease and major supplier contracts, and a 13 week cashflow forecast if available.
Key takeaway: treat business restructuring advice as a package of legal, tax and commercial choices. Run the checks above, gather the financial facts, and ask the vetting questions before you commit to a plan.
Ready to discuss your situation? Book a free initial consultation with Advanced Accounting Taxation & Business Services at the official website and bring the checklist above to make the first meeting productive. For regulator guidance see ASIC, Service NSW and business.gov.au, and for an independent outline of the small business restructuring process see Parkview Advisory.