Top tips to prepare for End Of Financial Year

With the end of the financial year fast approaching we have put together our top tips to help small businesses prepare for the end of financial year.

1. Apply for any stimulus packages

The pandemic means there are a range of stimulus packages and benefits on offer for micro small and medium sized businesses. Be sure to apply for all the applicable packages before the end of the financial year to maximise your benefit. Not sure if you are eligible? Give us a call for expert advice.

2. Get your books up to date

Getting your books up to date is the only way to understand your true financial position ahead of the end of financial year. With modern accounting software it is simple to keep on top of your deductions by allocating your transactions regularly (daily is ideal) and regularly reviewing your key data. Having your books up to date will help you to understand if you have enough saved for tax, how you are tracking and whether your cash flow will allow for further deductions.

3. Book a tax planning appointment

Once your books are up to date it is helpful to book a tax planning appointment. During a tax planning appointment we will review your current position, analyse the likely income and expenditure until the end of the financial year and create strategies to help you be in the best position you can be at EOFY.

4. Review your business structure

The end of the financial year is the perfect time to review your business structure. Is being a sole trader or a partnership best for you? Should you move to a company to save tax and protect personal assets? You can learn more about the pros and cons of business structures here.

5. Review your business plan

The end of the financial year is a great time to review your business plan. It’s the perfect time to review your progress on your goals, and to set new ones and a road map to achieve them in the coming year. We believe your business plan should NEVER have the chance to get dusty, it should be a living part of your business that helps you to create the business you intend and stick to your vision and mission. Remember a business plan doesn’t have to be a fancy or formal document, it can be a dynamic piece of work a notebook, a series of post its… it should be what you need it to be.

6. Review R&D opportunities

Research and development can provide significant tax benefits. Before the end of the finanicial year (and during recovery from a pandemic), can be the perfect time to review the research and development opportunities for your business. Not sure where to start? Give us a call and we will point you in the right direction.

7. Bring forward any expenses you can (keep in mind your budget)

Making payments for any expenses in your business ahead of the end of the financial year can increase your deductions and reduce your taxable income. It is important to keep in mind your budget though to ensure you have the cash flow to meet ALL your expenses before the end of the financial year and early in the new financial year. We often work with clients to create a budget that includes all cash flow, this creates a sense of certainty and clarity about what is required to make ends meet and thrive on a monthly basis. A budget like this can help business owners and managers to understand just how much it costs to maintain the business and what is required to meet stretch targets.

8. Think about the asset write off

This year the asset write off for businesses earning up to $500 million in turnover was increased to assets purchased for up to $150,000. This has been a welcome offer for many businesses with expensive plant and equipment. The new spend limit opens up the possibilities and the end of financial year is the perfect time to think about what that means for you. Can you afford that new machine? Is a new work ute feasible? Does your IT infrastructure need an upgrade? Now is the time to review and negotiate deals on assets that could help you to grow, innovate and thrive in the new financial year.

9. Make super contributions

Making your employees super contributions before the end of the financial year means they become a deduction in that year. If your budget and cash flow allow, paying your super contributions before 30 June can help reduce your tax liability, after all you were going to have to pay them early in the new financial year anyway.

10. Write off bad debts

Ahead of the end of the financial year it is important to review your bad debts. By writing off those that simply will never be paid before the end of the financial year you can reduce your taxable income.

11. Review depreciation

The asset write-off mentioned above is only available on assets purchased after 12 March 2020. For older assets that you have been depreciating over a number of years, now is the time to review them. Depreciation rules change from year to year so an annual review is essential.

12. Review your insurance

The end of financial year is the perfect time to review your insurance. You should consider:

-Price

-Are you covered for enough value?

-Are you covered for likely circumstances?

-Have your assets changed?

-Do you have personal coverage for permanent disability and life?

To effectively review your insurance we recommend seeking the services of an experienced insurance broker who can review your coverage, costs and requirements to tailor a policy or package that suits you. More here?

13. Review software needs

The end of the financial year is a great time to review your software needs both accounting and otherwise. You should look at the usability, features and price compared to others on the market. Remember what works for others isn’t always what is best for you. Some product features or even process flows could be costing you time if they don’t integrate or work well for you and your business.

The end of the financial year is a busy period but with some good preparation, planning and advice you will be on your way to a reasonable tax liability and a great start to the new financial year. Remember we are always here to help and provide you with personalised advice on your situation. Give us a call to set up a meeting today

Any advice in this blog is general in nature and is intended for information purposes only. For personalised advice please contact your accountant.