Keeping your books up-to-date has become even more important now for tradies and anyone working in the construction industry, who is required by law to hold a QBCC licence to operate their business. Last year, the Queensland Building & Construction Commission (QBCC) has introduced new Minimum Financial Requirements (MFR) which came into play early this year.

Starting from 1 January 2019 QBCC licensees need to provide financial information to the QBCC each year (as was the case prior to 2014). In addition, depending on their licence category, businesses will also be required to provide more detailed financial information in the form of a ‘balanced scorecard’. We’ve provided some general information in this article to highlight what it means for license holders of Categories 1 to 3.

Not only do QBCC license holders have to report to the authority on a regular basis, there are certain trigger points where QBCC will again be asking you for a current financial report. If you’re unsure about QBCC reporting and whether your bookkeeping is up-to-date for your business to respond appropriately, please contact us for a FREE QBCC Compliance Review for your piece of mind.

What bookkeeping has to do with your QBCC Licence

Since the beginning of 2019, the QBCC has suspended many businesses for non-compliance with the MFR. It seems that the biggest stumbling block for business owners is the accurate reporting of maximum revenue and asset ratios.
While it’s easy to complete a form and send it to the QBCC, it takes a well run financial system to be able to confidently project maximum revenue and report on asset values, because that’s what you are certifying to the QBCC.

As a bookkeeper I can only imagine the heart ache and sleepless nights a cancelled or suspended license would be causing Queensland tradies and business owners. I can also tell you that the only way to avoid this is to keep your book work up-to-date and regularly reviewed (quarterly at the minimum). If you have not yet implemented cloud-based bookkeeping with a package like XERO for example, now is a good time.

With the real-time reporting features of a powerful online bookkeeping system you could literally save your QBCC licence. The changes to the QBCC financial reporting means that you need to be able to provide financial data on turnover and asset ratios at the drop of a hat. For example, an event outside the normal reporting period can require you to update your financial information with QBCC. The event could be expiration of your Professional Indemnity Insurance Policy or a variation by 30% or more in Net Tangible Assets.

In order to spot a variation by 30% or more in Net Tangible Assets you absolutely need reliable financial data on revenue throughout the year. Plus, you’ll need an accountant, who is on the same page with you or your bookkeeper when it comes to monitoring your asset distribution and depreciation details.

Financial Reporting for Category 1 and 2 Licensees

Depending on your licence category you will need to complete and lodge Self Certifying forms. Category 1 is for Trade Contractors only and requires you to certify that you will NOT exceed maximum revenue of $200,000, and that the business has at least $12,000 Net Tangible Assets.

On this form, which can only by completed and signed by the license holder, you need to acknowledge that you are required to maintain the above Net Tangible Assets at all times and not exceed the above Revenue in the reporting year without reporting it to the QBCC.

If you hold a Category 2 license the maximum revenue is up to $800,000 and the business needs to have at least $46,000 Net Tangible Assets.

For Category 1 and 2 licensees there is no immediate impact. You will need to submit your financial information to QBCC by 31 December 2019.

Financial Reporting for Category 3 Licensees

Here the reporting requirements start to be more onerous. Instead of a 1-page form for Cat 1 and 2 licences, you now have to complete an 8-page form. The maximum revenue is up to $30,000,000 and the rules to calculate Net Tangible Assets are very specific.

The QBCC is also very particular that the forms be completed diligently and might even reject forms that have small hand-written alterations, other than the completion of the spaces provided on the form.

What are the Reporting Challenges?

If your business is experiencing a growth phase it’s especially important to keep an eye on your revenue. If you get a business growth spurt that tips you over the threshold of your current asset and liability ratios, you need to know about it, because you’ll need to report it to the QBCC.

The other critical part is that you need to know exactly what kind of assets to include or the asset and liability ratio could be wrong and may trigger a cancellation of your licence.

We are bookkeepers who understand the QBCC requirements, but also the challenges tradies and contractors are facing to meet them. Our regular reviews and quarterly QBCC compliance check can help tradies have peace of mind, and save a little before getting their accountant involved.