Can you hear that? The end of the financial year (EOFY) is rapidly approaching. How ready are you for it? You don’t need to wait until June to get started, in fact you shouldn’t!
Alleviate any EOFY stress and begin preparing now. There are several things you can do to get ready to lodge your tax on time and to prepare yourself for the year ahead. We’ve assembled this helpful checklist for small business owners to avoid that tight band of tension encircling your temples come the end of financial year.
1) Comply with ATO requirements
Oh yes. The big one. At the conclusion of the financial year, this is the obvious consideration for your EOFY tasks.
- File your income tax return
- Complete a Business Activity Statement (BAS),
- Reconcile your PAYG withholding payment summary report, and payroll tax.
2) Look to your financial software
This is the foundation of your businesses financial management. A powerful and robust cloud-based software service is inexpensive these days and provides functionality that you will find invaluable by the time the EOFY rolls around.
Most online accountancy services will enable you to collaborate with your accountant in real-time, along with an automated bank data feed – perfect for EOFY.
3) Reconcile your accounts
All of your major accounts need to be reconciled. Get on it now. This activity includes:
- Your bank and investment accounts.
- Customers who have large outstanding amounts they are yet to pay.
- Your own debts with suppliers and other creditors.
- Equipment you have leased.
- Office leases.
4) Reconcile your payroll
As well as reconciling debts with external businesses, it’s also important to reconcile your internal payroll concerns. Outstanding leave, superannuation, and long-service entitlements are just some of the many payroll matters that have financial commitments attached.
5) Review your working capital
Have you accounted for all of your stock balances? 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 ordering procedures to minimise excess stock concerns.
For small businesses that specialise in professional services, work-in-progress is capital that must be accounted for. Are any resources being held-up with individual projects? Are your clients paying their bills on time for ongoing work?
6) Create a valuation of your assets
Determine the true market value of your holdings 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.
7) Review your IT systems
Are all of your current software 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 broadband connection robust enough to deal with the constant connection to the Internet that your staff require to perform their duties? Regular review of your speeds is a great idea.
It’s also a good time to ensure that all of your domain names are registered and that you are aware of any expirations taking place over the next financial year. A 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, customers will be unable to reach your website. Furthermore, an expired domain name will lead customers to believe that your business has ceased trading or is in dire financial trouble.
8) Set financial performance targets
Did you meet your targets this year? And 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
Plan ahead for your flow of cash. After all, if your business runs out of cash and is not able to obtain new financing, it will become insolvent. Stick a fork in it – it’s done. You need to be aware of any potential cash flow shortfalls now so you can ensure that your staff and suppliers are paid up.
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.