We can hear it….. can you? It’s the sounds of the shuffle of paper, clacking of keyboards and tapping of pencils - end of the financial year (EOFY) is right around the corner.
Are you ready for it? You don’t need to wait until 30th June to get started, in fact you shouldn’t! The time to start, if you haven’t already, is NOW.
Relieve any EOFY stress and begin preparing.
There are so many things you can be doing now to get ready to lodge your business tax return on time and to prepare your business for the year ahead.
We’ve constructed this short, sharp, helpful checklist for you to avoid that tight band of pressure pulsing at your brain come June 30th.
1) Complying with Tax Office requirements
Oh yes. This is a doozy. At the end of the financial year, this is the most obvious consideration for your EOFY tasks.
Wrap up your Recs – Banks, Payroll, Debtors, Creditors & GST
Complete your June Quarter Business Activity Statement (BAS),
Reconcile and pay your Employee Super.
Book an appointment with your Accountant and file your income tax return
2) Look at your accounting software
This is the basis of your business’ bookkeeping management. A powerful and robust cloud-based software service is not expensive these days and provides functionality that you will find invaluable by the time the EOFY rolls around and ongoing.
Most cloud based accounting packages will enable you to collaborate with your Accountant in real-time, along with your live bank, loan & credit card data feeds – it’s perfect for EOFY.
3) Reconcile all your business accounts
All of your major transacting accounts need to be reconciled. Get on it now. This activity includes:
Your bank, loan, credit card and investment accounts.
Debtors who have large outstanding amounts they are yet to pay.
Your own debts with suppliers and other creditors.
Any Equipment you have leased.
Your Office leases.
4) Reconcile your payroll
As well as reconciling debts with external businesses, it’s also important to reconcile your internal employee payroll accounts to ensure you’ve not missed an obligation, such as superannuation. Look at outstanding leave accruals, superannuation, and long-service entitlements as just some of the many payroll accounts that you will have financial liabilities attached to.
5) Review your working capital
Have you accounted for your stock balances? Do a stock take, as the end of financial year is a great time to clear out obsolete stock with a sale. In addition, it may be time to evaluate your ordering procedures to minimise excess stock issues gong forward. Get your team involved in this as it is also an education process around selecting and ordering stock.
For small businesses that specialise in professional services, work-in-progress is an asset that must be accounted for on your balance sheet. Are any resources being held-up with individual projects? Are your clients paying their bills on time for ongoing work?
6) Establish a valuation of your assets
You should determine the true market value of your assets for future investment opportunity. Accurate market valuations can be used for access to bank loans to further develop your business, or to sell-off valuable assets that you’re not utilising…. So well worth your time doing this exercise.
7) Review your subscriptions services and IT systems
Are all of your current software and licenses up to date/paid for? With many software packages now shifting to embrace cloud-based services, it’s now becoming far more difficult to use software with expired licenses. While on the topic of cloud computing, with so many software services embracing the cloud, is your office’s Internet connection strong enough to deal with the constant connection to the Internet that your team require to actually do their duties? Regular review of your speeds is a great idea.
It’s also a good time to ensure that all of your web domain names are registered and that you are aware of any expirations taking place over the next financial year. Your domain name is tied to the very brand of your company and for any business that conducts online transactions; the domain name is your link to the Internet. Without it, clients and customers will be unable to reach your website. Furthermore, an expired domain name may lead people to think that your business has ceased trading or is in some kind of trouble.
8) Time to set financial performance targets for 2022/2023
Did you meet your targets this year? Where do you want them to be at the conclusion of the next financial year? Now is the time to put in place realistic targets throughout the financial year for you to stay on track.
9) Establish a cash flow forecast for 2022/2023
Plan ahead for your flow of cash. After all, if your business runs out of cash and is not able to obtain any new financing, it could become insolvent. You need to be aware of any potential cash flow shortfalls sooner rather than later to ensure that your plan in advance how to avoid it. If your company invoices clients, it is important to identify any clients who are not paying their debts to you in the required time-frame. Stay aware of dates that invoices are due, along with any other significant dates relating to your cash flow.
We’ll be posting along the way on our socials about all the different things you need to be looking out for in terms of claiming deductions, so look out for those!