Now’s the time to wrap up the financial year that was, as well as prepare for the 2015/16 financial year.
www.business.gov.au has released a checklist of 10 essential tasks for small businesses to complete for EOFY and here we review their recommendations.
Planning at this early stage enables you to identify and address a lack of performance, whilst minimising reactive financial management and risk going forward.
Instead, you commence the year in a position of financial control, with financial transparency and strategic foresight that can set you up for success.
With that said, let’s review the 10 recommendations from www.business.gov.au.
1. Record keeping and compliance
As a small business owner, your list of responsibilities may include the following:
· Preparation of a Profit and Loss Statement summarising income and expenses
· A Debtors and Creditors Summary statement
· Gathering all records of asset purchases and expenditure made on improvements to assets in order to calculate depreciation expense claims, and for the purpose of capital gains tax
· Lodging your Income Tax Return
· Lodging PAYG withholding, Fringe Benefits Tax (FBT) and Goods and Services Tax (GST) yearly reports or returns
· Meeting SuperStream requirements.
2. Identify the Tax Deductions you’re entitled to
Some research into the tax deductions you can claim is always a worthwhile exercise.
In the 2014/15 financial year, did your business …
· Setup a website?
· Incur motor vehicle expenses?
· Use diesel fuel?
· Incur travel expenses
· Use machinery, tools or computers
If you answered yes to any of these questions, you may be able to claim in tax deductions.
3. Use a registered tax agent
Taxpayers who use unregistered tax or Business Activity (BAS) agents are not protected. Therefore, it’s critical to confirm your tax agent is registered with the Tax Practitioners Board (TPB).
4. Revise the 2015/16 financial year’s tax changes
As part of the Small Business and Jobs Package, the Government releases a range of other measures and changes that small business owners should keep abreast of.
Key changes starting this financial year that you should review include:
· Small business tax breaks that commenced 1 July 2015.
· If you’re starting a business there are immediate deductions that can be claimed for professional services used started on 1 July 2015
· Changes to FBT and Capital Gains Tax (CGT) to reduce red tape for small business also kick off from 1 July 2016.
5. Watch out for tax refund scams
Tax time is when scammers are more active and will target small business owners with scams including:
· The claim that you are entitled to a refund for overpaid taxes. To receive this refund, they will insist you need to pay a fee for administration or transfer costs.
· The claim that you have underpaid your tax and need to immediately pay the amount owed. They may request your credit card or debit card details, or ask you to send money through a money transfer.
Be mindful of scams and run any tax related claims past a wary accountant.
6. Conduct a detailed review of your finances
Arrange a meeting with your bookkeeper or accountant to review your finances over the 2014/15 financial year.
Did you meet your targets? If not, why not?
Discuss the measures you can take to improve your finances for the year ahead.
Setting financial targets gives you and your team a clear number to work towards.
It’s also a smart move to forecast cash flow to ensure staff wages and supplier expenses can be covered in case of shortfalls.
7. Audit your business and marketing plan
A lot can happen in a year!
There is no better time that the new financial year to review your business and marketing plans to identify the problems, issues and opportunities that need to be addressed or explored.
As they say failing to plan, is planning to fail, so don’t overlook this beneficial activity.
Focus on the big picture and your strategies above tactical considerations.
Have your strategies resulted in your objectives being met?
If not, it’s time for a brainstorm session with your business’s key decision makers and big thinkers.
Is your industry undergoing a shift that could impact your business positively or negatively, or are there any emerging trends in your space you need to take note of?
Now’s the time to think about how you can optimally allocate your operational and marketing budgets for the greatest potential ROI in the short and long term.
Keep in mind, the 80/20 rule, which states that roughly 80% of the effects or rewards come from 20% of the causes. These are the hotspots to look for in your business, so you can maximise your effort and time/cost investment.
8. Review your business structure
Has your business experienced growth and expansion? It may be time to restructure your business to improve your processes and profitability.
Learn more about changing business structures.
9. Conduct an insurance review
Maintaining your insurances is one of the most important things you can do to protect your business.
Review your existing policies and consider whether you need to update your level of cover.
Double check your cover for natural disasters such as a fire or flood. Don’t assume you’re covered!
10. Run a backup on all your files
Your data is one of your most important assets and there is nothing like the panic that sets in when it’s been jeopardised. Avoid this panic by securing and backing up your registration, financial and customer data in an off-site location. This includes any important business documentation and records.
Remember that putting in the time and effort now can set you up for a prosperous year ahead.
Need further financial advice or a review of your insurances?
Get in touch with your TWD adviser. If you’re not currently a TWD client, contact our office via firstname.lastname@example.org.