It’s a new financial year, but are you still recovering from the last one? Now is the time to take action and breeze through tax time next year. Your future self will thank you! Here we look at what small businesses do to streamline their finances, and talk to tax expert Dr Steven Enticott about how best to beat the end of financial year slog in 2018.
Running your own small business can be one of the biggest challenges you’ll ever face. That’s why it’s so important to have the right systems and processes in place so you can focus on the day-to-day aspects.
Finance professionals, taxation specialist and senior partner at CIA Tax Dr Steven Enticott said burying your head in the sand and not being prepared at tax time can make or break a small business.
“Most of the [small business] pain points stem from avoidances, followed quickly by large bills and late lodgement penalties [which bring] on a cashflow crisis that may even sink the business,” he says.
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“No planning, no budgeting, no tax effectiveness, no cashflow system – they all lead to rapid disasters. We accountants love to say ‘if you can’t measure it, you cannot manage it’ and the longer you leave it, the problems become like a rolling snowball.”
Log those kilometres
Accurate fuel logs and keeping track of expenses for company vehicles will work in your favour at EOFY, Enticott says.
“[Fuel logs] can make a major difference to tax outcomes and we are often frustrated by clients who fail to do a logbook and are forced to use the lesser claiming methods to claw some benefit back – sometimes costing thousands of dollars,” he says.
Fuels cards can capture fuel use data, servicing costs and other expenses in one place, and offer a suite of standard reports to suit your business needs – all within Australian Taxation Office guidelines.
These cards help you keep track of your monthly spend, save you money and lighten your load at tax time.
Keep track of payments
Small business should invest in bookkeeping and invoicing systems to avoid tax time headaches – and save time and effort.
“Everyone should have some sort of up-to-date bookkeeping system. It doesn’t have to be the latest, greatest cloud-based accounting system either as any system will do as long as you keep it up to date,” he says.
“Being able to issue an invoice on the spot, to take online payments, to further issue automated invoices (for regular works) using templates that you can reproduce quickly go a long way to improving business cashflow and cause a lot less headaches!
“Another major benefit of automated invoicing systems is it will usually integrate or already be a part of your accounting software so it is speeding up the process of preparing your accounts and keeping you in front of the accounting curve.”
It’s the little things
If you implement the right processes throughout the year, EOFY doesn’t need to be a headache. Other ways you could streamline your finances include:
* Putting tax aside – work with your accountant to arrive at a percentage of income that needs to be put aside to cover all applicable taxes.
* Update accounts monthly – doing this, combined with reviewing your business’s performance regularly will get you in front with next year’s tax preparations.
* Meeting with your accountant – take a look at performance to date and make forward predictions well before the end of the financial year.
* Investigate ways to streamline manual tasks – as stated above, accounting automation and fuel log automation could save you time and money in the long run.
Caltex has is committed to working with Australian businesses. As the nation’s largest fuel network, we supply high-quality fuels to a diverse number of customer segments, we offer everything you need to help drive your business.