It’s that time again. The requirements of end of financial year are upon us once more. To take the heat off EOFY, we’ve crafted a short guide with four tips to help you get your tasks done faster.
Time to get your ducks in a row and tick tax time off now, so you can get back to growing your business.
Wrap up the year and get ready for your accountant
Before anything else, you need to close off your activity for the previous year. This will involve bank reconciliation and several accounting tasks.
This is all about pre-planning and being ready to chat with your tax agent or advisor with all the preliminary tasks completed.
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If you want a full checklist to ensure you don’t miss a thing this EOFY, check out Reckon’s step-by-step guide for the 2020/2021 financial year.
Before you speak to an accountant or bookkeeper, work through the following checklist to wrap up the previous year and ensure you’re ready for the financial year ahead.
- Ensure your accounting file is locked off and all bank accounts reconciled.
- Calculate your profit or loss for the year.
- Determine outstanding accounts receivable and calculate bad debts.
- Review working capital and debt.
- Collate records of your business expenses and assets to calculate deductions.
A year in review
On top of compliance related accounting tasks, you should also take this time to reflect on the broader picture and performance of your business.
As with many Australian businesses, it’s likely you experienced a tumultuous year full of unexpected challenges and hardships. More than ever, you need to take stock of what occurred and the lessons learned.
This can be aided by running cashflow reports and profit and loss statements related to various product or service lines. Ask yourself the following questions:
- Do you have regrets about how your business fared over the previous year?
- Do you have underperforming offerings?
- Have you identified issues you can rectify or efficiencies you can create?
- Are your overheads too high?
- Did you struggle with cashflow?
- Is your business model still working?
Compliance and tax minimisation with your advisor
EOFY is a time when ATO compliance comes into sharp focus. While you must file a tax return, submit BAS and reconcile your PAYG withholding summary, it’s also the time when you put your mind to reducing taxable income.
The best way to manage these processes efficiently and with very little chance of missing something is to consult your bookkeeper, accountant, or advisor.
Create a strategy to minimise your income and maximise expenses, not only for this year but importantly for the coming year. Remember to take full advantage of ATO incentives such as the instant asset write-off scheme and temporary full expensing.
Plan for the year ahead
After wrapping up the prior year and fulfilling your compliance responsibilities, your next step should be to plan for what’s to come.
Look at your list of things that didn’t go right in your review of 2020/21. What measures can you introduce to improve your situation?
What do you plan to achieve this year? Do you have well-defined business goals and a map to get there?
Take time to reset your business trajectory by taking a fresh look at your products and services. What’s working and what needs adjusting?
When planning for the year ahead:
- Create new goals and metrics for the coming year.
- Create a new budget based on available data from your previous year.
- Complete a cashflow forecast.
- Review your prices or fees.
- Review the wages and superannuation.
- Review the appropriateness of your business structure or model.
- Look into new software and workflow options to make your business more efficient.
- Scrupulously check for ways to cut costs.
- Look into purchasing new assets that will contribute to cashflow.
At Reckon we are more than just accounting software, we aim to help small businesses build the foundation to grow and succeed – easy and affordable compliance is an essential part of this.