With EOFY rushing towards us, it is time for business owners to start thinking about how to best position the business in the lead-up to and for the financial year ahead.
The key, as always, is for business owners not to leave it too late. By ensuring you have financial check-ins regularly throughout the year with your accountant, bookkeeper or CFO, you’ll ensure you are proactively working on your business to get ahead of any tension points in the future, as well as leveraging opportunities for your business.
Below are a few of my top tips to check off your to-do list as we approach EOFY.
Get the books up to date and everything reconciled. Make your life easier by using technology to automate this process.
Keeping on top of reconciliations serves a few purposes. It allows you to see where you are from a financial standpoint, chase up any outstanding debtors and ensure all your tax obligations are up-to-date. Costs are increasing at the moment, and one of the questions I am regularly asked is about pricing and whether businesses should raise them. It is more difficult to answer this question without the books being up-to-date to do accurate margin and pricing reviews.
If you haven’t introduced technology to this process yet, now is the perfect time to do so as we roll into a new financial year. Whilst there is an ongoing investment in software like Xero, the automation and reporting benefit makes it worth it.
Engage a tax accountant now for tax planning
An added benefit to having everything up-to-date is that it helps an accountant with any tax planning that may need to be done before financial year-end.
Checking in before 30th June 2022 will allow you to run through your business with your tax accountant. Some of the key areas you can address with your accountant may be:
- Loans to shareholders (or associates) and any Division 7A issues that may arise
- Wage top-ups and any distributions or dividends
- Additional superannuation contribution payments
- Looking at your superannuation contributions being paid before 30th June 2022. Superannuation contributions can only be claimed as a deduction to the business once they have been received by the superannuation funds. This can be weeks before the 30th (I.e: now), so make sure you are across what these deadlines are with your software.
Keep the endgame in sight! Are any additional purchases for your business in line with your overall business strategy and forecast?
Don’t buy something just to claim the tax deduction in your business. The additional benefit is only 25-30%, dependent on your structure. If you do, however, have business expenses you need to purchase then talk to an advisor about bringing these forward to claim the deduction this financial year.
Small business owners are getting bombarded by EOFY sales and ‘buy now’ opportunities to get the deduction prior to 30th June. Be disciplined with your spending. If you don’t need it for the business, don’t buy it just to claim the deduction.
It’s a busy time of the year, but with a little planning and working on the business, small business owners are in the best position possible to reset, reflect and start the new financial year off with a strong financial foundation. The next 12-18 months are looking to be challenging ones for a lot of industries, so make sure you are putting the work in now with your business to set it up for success.
Disclaimer: Dynamic Business or our contributors does not provide tax, legal or accounting advice. This article has been prepared for informational purposes only by our contributor and should not be relied on solely for tax, legal, or accounting purposes. You are strongly encouraged to consult your advisors to determine how the information may relate to you or the specifics of your business.