Next week will see the end of the 2014/2015 Financial Year. So what does this mean for a small business? What could you or should you be doing in preparation for this important milestone?
Here are my top tips and recommendations to help you prepare for the new Financial Year.
1) Move to the cloud
If you have not yet converted your bookkeeping to a cloud based application such as Xero or Quickbooks now is a great time to plan for this transition. The first step is to reconcile your records to 30 June and than make the move from 1 July.
The cost of the leading online accounting platforms will cost you between $15 – $60 per month and will be the best money you will spend. The cloud based platform will help you automate your business processes, reduce time to reconcile your accounts, reduce or eliminate the need for paper based records, provide your clients with accurate and timely invoicing and most importantly provide you with high quality information to help you make more informed decisions about the allocation of your scarce resources.
2) Record keeping
Stop putting off your record keeping, there wont be a better time to clean up your records and once this is done you can move on with running your business. Make plans to have all your record keeping updated by early July. Key tasks should include:
- Bank reconciliation to 30 June
- Prepare employee group certificates
- Prepare your June quarter BAS / PAYG / FBT statements (Due 28 July for paper based users or 11 August for online users)
- Conduct a year end stocktake where your business has a material inventory balance
- Calculate your depreciation expenses through updating your Fixed Asset Register
3) Tax planning and considerations
There are a number tasks you can complete at this time of year to ensure you are minimising your tax to the greatest extent legally possible. Theses tasks include:
- Review your over 90 day debtors listing. If you have amounts owing from debtors you have given up on ever receiving consider writing off this debt prior to 30 June.
- Look at bringing forward any prepaid expenses
- Make key business purchases that are required and take advantage of the recent Government Budgets allowance to immediately write off any asset purchases up to $20,000
- Investigate the tax implications of taking funds out of your business out as dividends versus wages.
- Delay new jobs and push out invoicing to 1 July to push additional revenue into the next financial year where possible (assuming your business is in a tax payable position)
- Don’t be fooled by your mate’s talking you into fantastic tax deductions that seem too good to be true, they probably are. Remember our tax system is based on self assessment so yes you can claim whatever you like. However when / if you get audited you will need to substantiate your claims and pay back monies claimed in error and probably penalities in addition to this.
- New tax breaks for small business (including sole traders) become effective from 1 July.
- Consider using a registered tax agent to compile and lodge your tax return
4) Business Planning & Forecasting
This is the best time of year to analyse your financial and operation performance for the financial year. Take time out from your daily business actitivies and reflect on what has worked and what has not and put plans in place to exploit what has worked or cease what has not.
Rarely do small business owners find time to reflect and take ‘blue sky time’ but taking a few hours can have a material impact on the success of your business. Other activities that should be undertaken include
- Challenge the top 20 expenses of your business. Negotiate with suppliers to ensure you are getting the best deal you can
- Review your current staffing levels and expenses
- Analyse your marketing efforts and ensure you a receiving a return on your investment
- Take time to update or build an effective business plan and financial model that you can use periodically throughout the year to assess performance.
- Review the financing arrangement in place and assess re-financing options available
- Ensure you are adequately insured
- Assess your current business structure and confirm it remains the optimal structure for your business
- Back up your files and records
If you believe your business could benefit from an independent review performed by an experienced business consultant call TR Consulting today !