With winter in full swing, Australian business operators are gearing up for what can be an arduous task – getting on top of their paperwork for end of financial year (EOFY) reporting.
It’s not nearly as much fun as a Christmas in July dinner, but arming yourself with knowledge to meet your compliance obligations can put you on the path to prosperity.
See winter as an opportunity to reflect on the success of your growth strategy, review the financial year just past and proactively approach this one. Taking time now to review your systems and processes means you’ll be ready to hit the ground running for FY20/21 and potentially get ahead of the competition.
When viewed as an opportunity to give your finances, operations and strategy a tune-up, EOFY really can be a launch pad to a happy and prosperous new year. Simple actions today can make a big difference to tomorrow’s bottom line and pace of growth (among other areas!).
Here are our seven steps to a happier new financial year.
1 – Get more familiar with your books
Don’t wait to get to know your business better – it’s your income and your nest egg, right? If cash flow, taxation and forecasting aren’t your forte, get an accountant with experience in your industry. They can identify potential EOFY issues such as incorrect transaction dates and inventory anomalies; then these can be monitored in future. And if you’re not already doing so, update your data entry and records at least once a week. This includes accounts payable, receivables, payroll and inventory. Identifying errors is much easier over a shorter period than after 12 months, so consider reviewing your books every two months rather than every quarter. Mistakes can be picked up sooner, potentially saving you dollars.
2 – Compare FY19/20 against the previous year
Compare this past year with those before it to pinpoint positive and negative trends. When were your peak periods? How well did each of your services perform? Your staff? Talk to a professional who can help identify which delivered the healthiest returns and to re-evaluate your margins and loan terms, help you with managing cash flow, inventory and staying on top of debtors, etc. They can even perform business benchmarking activities as part of your steps to achieving a happier financial year.
3 – Familiarise yourself with your key compliance needs
Are there any recently introduced thresholds, subsidies, deductions or other key tax and compliance aspects that you should already be across as a business operator? Are there any newbies for FY20/21? Can your software/systems cater for them? If you are managing your business under the JobKeeper Scheme, what are your requirements there? Read this article on ‘How to make your business tax compliant for EOFY 2020’ so you know your stuff, then do more industry-specific research.
4 – Ensure your paperwork is lodged on time
Be sure to pay your employees’ super contributions on time and if not, familiarise yourself with paying a super guarantee charge (SGC) and lodging an SGC statement to the ATO. Know that your Q4 Business Activity Statement is due on 28 July (as is your SGC, if required). If you lodge your tax return yourself, it needs to be lodged by 31 October, but if you lodge with a registered tax agent then contact them for more information. Take the steps you need to – now – to hit your deadlines, or ideally well before them.
5 – Back up your data to ensure compliance
The ATO requires businesses to keep detailed records for a minimum of five years. Make sure you have a secure data back-up system that enables this. If you don’t already use accounting software, consider taking up a product that automatically does the back up for you. Enter cloud accounting – this acts like a virtual assistant by automating much of the organising of your financials. It also offers a comprehensive snapshot of your business that’s available immediately at any time. With ordered paperwork, you can avoid last-minute hiccups and nasty surprises and make a smoother transition into this financial year.
6 – Invest time working on, your business rather than in, your business
Take the time to formulate a refreshed business strategy for this year. It might contain a SWOT analysis, competitor intelligence, marketing plans and measurable goals. These targets may be financial, such as increasing lead conversion by X%, reaching a revenue target at a specific time or reducing operational costs by X%. Or, they may be operational, such as expanding your services, moving into another region or upskilling staff. Consider involving team members in building the strategy to keep them motivated and accountable.
7 – Revisit your insurance
The start of a new financial year is an opportunity for a fresh beginning. Is it time to check in with your business insurance provider to ensure you’re fully covered for what your business does today – rather than what it was months or years ago? Do you have all the right insurance endorsements in place for the activities you’re planning this financial year? Make sure you’re safeguarded properly, as one of your key steps to a happier financial year.
If you need to talk to an insurance industry expert about where you’re at and what you need to move your business forward safely, give Rapid Solutions a call on 1300 309 169.