Preparing for End of Financial Year
Critical steps to managing the end of financial year
With the 30th June fast approaching, now is the time to start preparing for the end of financial year and making the process as simple and seamless as possible. The end of the financial year shouldn’t just be seen as an obligation to meet tax reporting requirements but the perfect time to review all elements of your business practice.
Here is a check list to follow to help you negotiate the stresses of the end of financial year.
- Ensure you meet all your ATO requirements – This is the obvious requirments that needs to be done. There are income tax and BAS returns to be filed, PAYG payment summaries to be reconciled as well as SuperStream and payroll tax obligations to be considered. Now is the time to be getting all your financial records in order. Ensure that you have all relevant financial records accessible and filed in logical order. Receipts, bank records and invoices all should be readily available. If you are missing documentation, you can take steps now to get copies of any missing receipts or statements
- Review your IT systems and Financial software – With more and more software packages moving to cloud based technology, it is becoming increasingly difficult to use software packages and systems with expired licenses. Is all your operating software up to date and licenced? Are your IT systems working seamlessly and delivering the information you need on your business? It is also an opportune time to review any domain names that you have registered and ensure that expiry dates are noted and paid well in advance. Losing a domain name registration can be embarrassing and quite expensive. Domain names in this day and age are a vital aspect of your brand and are to be protected at all costs
- Reconcile your accounts – This is a vital function of business management to assist with loss prevention, following up on transactions and watching business performance. Accounts that should be reconciled include bank and investment accounts, your creditors and debtors ledgers and outstanding equipment leases
- Reconcile payroll accounts – review all annual leave, superannuation and long service leave entitlements and that will assist you to prepare and make provision for such matters
- Assess Your Working Capital – this includes such things as stock and work in progress. As you approach the end of the financial year., it is a good time to clear out obsolete or surplus stock. You may also like to review work in progress and identify any projects that are taking up too much time and/or resources
- Determine the market value of your assets – are your assets working for you and are you gaining the best return on your investment? Determining the true market value of your assets can assist you to source finance if required, make better investment decisions and identify assets that could be sold to free up working capital
- Review you business targets. Measure your business’ financial performance against your financial targets for the year and set new targets for the coming one. Your new targets should be realistic but challenging at the same time.
- Look to maximise tax deductions within the current financial year – this is largely dependant upon how the business is tracking – a tax deduction only reduces tax payable – if the business is close to break even point -any further tax deductions aren’t going to reduce tax payable significantly. If the cash flow is there and you are looking to reduce taxable income now might be the time to bring forward any necessary purchases (seek advice from your accountant first)
- Look to the year ahead – by establishing a realistic cash flow forecast you can identify any potential cash flow problems well in advance and implement plans to cover these contingencies. When formulating your cash flow forecast, it is a good time to review debtor payment patterns and identify the clients that appear to be having trouble meeting your payment terms.
- Seek expert advice – get the right advice from qualified professionals in relation to tax, accounting and software applications. Your time is best spent running and maintaining your business.
The end of financial year presents challenges and opportunities for all small businesses, a little preparation prior to the 30th June will help you to handle the added stresses and strains of this period just a little more easily.