Your Essential New Financial Year Checklist
New years day isn’t the only day of the year to make a resolution, particularly if you are a small business owner. The start of the new financial year presents a great opportunity to take stock of your current position and set in place strategies to better support your business for the upcoming financial year.
We’ve assembled this checklist of things you should look at as you get set to plan for the year ahead.
Take A Step Back And Assess The Previous Year
Every successful small business owner is actively monitoring their finances and internal company processes throughout the year, but it can be very easy to get caught up in the minutiae. Take some time out and look at your company with a broader examination of what you are doing. Were you meeting all of your financial obligations with customers, suppliers, and staff? If not, why not? Were there discounts you missed out on for not paying early? Did you need to back-pay missed super contributions?
Your review should include looking at your finances, sales performance, marketing, suppliers, competitors and employees.
Addressing issues like these will not only make your end of year tax payments cheaper and less stressful, but it also presents an opportunity to improve your financial behaviour.
Consider Your Business Objectives For The Year Ahead
Do you have a plan for the year ahead? Many people will consider a 3-5 year plan when they launch their business, but will start to waver several years in. It is easy to be distracted by the daily rigours of your job, but without a road map how do you expect to build your business?
Once you’ve assessed how the previous year went, it really is time to put in place a plan to take you through the next twelve months and beyond.
If you are not sure where to start, the small business department of your bank or financial institution may be able to help you create a business plan. Alternatively, there is an app for that. The Australian Federal Government have produced MyBizPlan, which is designed to:
- define your business objectives
- learn about your industry, market and competitors
- prepare you for challenges you may face, and
- manage your business finances.
Get Educated About Tax Concessions
If you are running a small business with an aggregated turnover (the sum of your gross income or proceeds) of less than $2 million per year, you are entitled to a number of tax concessions aimed to support small business.
These concessions are on:
- Capital Gains Tax (CGT)
- Income tax
- Goods and Services Tax (GST)
- Pay As You Go (PAYG) instalments
- Fringe Benefits Tax (FBT).
While your accountant should be able to advise you on how you can best take advantage of these concessions, it will benefit you to be aware yourself of what you may be eligible for. With a new financial year having commenced, there is no better time than to re-acquaint yourself with the concessions that may be available to you.
Improve Your Profit Margins
Where should you be focused and where is the fat you need to trim? Start with examining your expenses and check to see what your company spends on key areas like payroll and materials. Once compared against the company’s gross revenue, you can determine what your expenses are when compared against your product categories.
Are your expenses in each category consistent with industry standards? If you have product categories that don’t perform well financially, consider whether your company can afford to eliminate them. If they’re not a loss leader, often they are simply ruining your profits.
As you take action to improve your profit margins be sure to identify areas where you can save time and money by consolidating processes, outsourcing work, eliminate waste, and introduce automation.
Consider your own business and the tools that you are employing from both a hardware and a software perspective. Are you making the best use of the technological tools needed to a) meet your customer’s expectations; and b) make your own processes more efficient?
From a hardware perspective, there are multiple reasons why you should consider upgrading your equipment, with security, increased productivity, and an increased quality of work serving as a compelling justification. The decision to upgrade your equipment is made easier by the introduction of the Federal Governments budget announcement of a temporary increase to the instant asset write-off, enabling your small business (providing you have an annual turnover of under $2 million) to claim back purchases of up to $20,000.
But don’t feel that embracing technology immediately equates to a large expenditure of capital. That is not the case at all. With the rise of mobile and cloud computing, the cost and ease of access to sophisticated software packages to help your business has never been more favourable.
You can manage your finances on the go with financial management apps. Whether that is simple automation tasks like generating invoices on the spot for your clients, or more sophisticated solutions like Reckon One – a cloud accounting platform built with modular design in mind. Reckon One is built for mobile and only charges its users for the functions they need with a base cost of $5 per month and additional functionality like Invoices, Bankdata, and Projects available for $3 each per month
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Do you have any rituals or proven processes that you undertake each year as you get started on the new financial year? We’d love to hear them in the comments below!