The end of the financial year is rapidly approaching. How ready are you for it?
You don’t need to wait until June to get started. 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 prepare and avoid end of financial year blues.
√ Comply With ATO Requirements
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.
For any business that has 20 or more employees, they must be SuperStream compliant before 30 June 2015 when sending superannuation contributions on behalf of their employees. For any business with 19 or fewer employees, employers will have until 30 June 2016 to meet ATO requirements.
√ Financial Software
This is the foundation of your 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.
√ Reconcile Accounts
All of your major accounts need to be reconciled. This 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.
√ Reconcile 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.
√ Review 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?
√ Market Valuation of 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.
√ 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.
Is the technology you are using up-to-date? The modern day workforce expect that the equipment they use is as current and functional as their own devices. This is, in part, why so many companies have adopted a Bring Your Own Device policy. If you’re employing a BYOD policy in your workplace, is your existing IT able to communicate with your employee’s devices? Also, 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?
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.
√ 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.
√ Establish a Cash Flow Forecast
Plan ahead for your cash flow. After all, if your business runs out of cash and is not able to obtain new financing, it will become insolvent. You need to be aware of any potential cash flow shortfalls so you can ensure that your staff and suppliers are all paid.
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.
* * * *
The end of financial year can be a time of great anxiety, but with some forward planning, it is easy to stay on top of it all.