July 1 is one of those days in the year that invokes a wide spectrum of emotions –especially for small business owners. To many, it can strike a unique combination of fear, dread and even panic. At the start of the year it seems to appear on the horizon, then with each month hurtles faster and faster towards business owners.
Many owners leave their EOFY preparations until the very last moment, while others are more prepared (and subsequently less panicked). So if you’ve been focussing on your business and left your EOFY preparations until late, there’s still time to do a few simple things that will help you assess your financial situation and plan for the future.
Sort your ATO paperwork
At the end of the financial year, there are a few things that businesses need to do to comply with Australian Tax Office requirements. These include filing your income tax return, completing a Business Activity Statement (BAS), reconciling your PAYG withholding payment summary report, and payroll tax. There’ll also be superannuation requirements that relate to the number of staff your business employs.
Reconcile your accounts
Ensuring all your major accounts are reconciled and everything is where it should be is a major priority. This includes reconciling your bank and investment accounts, following up any customers that owe large amounts, paying any outstanding debts with suppliers, and sorting our any office or equipment leases. This can all be very time consuming, so staying on top of your accounts and records throughout the year will reduce the level of stress at tax time and ensure your reporting is accurate.
Reconcile payroll
While you’re reconciling accounts and reviewing debts with external businesses, you should also reconcile your internal payroll obligations. Review and make allowance for any outstanding staff leave, superannuation and long-service entitlements, as these usually have significant financial commitments attached.
Review your working capital
Taking into account all of your stock balances is another important task for small business owners at the end of the financial year. If you’re stuck with excess obsolete stock, it’s a great time to sell it off. It may also be a good time to evaluate your ordering procedures to minimise any issues of excess stock.
Don’t spend for the sake of spending
Some businesses fall into the trap of spending money in June simply to get a tax deduction. This isn’t always the best approach, as it can often lead to spending too much and financial trouble in the long run. By all means, spend money on essential business purchases that are needed, but consider it an added bonus if you receive a deduction on top. With technology bringing new advances by the month, reviewing your IT needs for the future may also a good idea at this time of year – especially if you can get a deduction.
While end of financial year can be stressful for some small business owners, it’s also a very opportune time to review the previous 12 months performance of your business, and develop strategies for a successful business future.
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