Agreed, EOFY — end of financial year — is never fun, certainly not as much as a night out. But despair not. If you start now — and do all the smart things — your next EOFY could be a walk in the park. To set you on the right track, here are top 10 tips from MYOB:
1. Get help. Know your business better. If cash flow, taxation and forecasting aren’t your areas of expertise, get help from professionals with experience in your industry. They can identify potential EOFY issues, such as incorrect transaction dates, foreign exchange rates or inventory anomalies, and help monitor them on an ongoing basis.
2. Track data. Compare your current tax year against previous years to spot trends. When were your peak periods? How well did each of your products/services perform? Which ones deliver the healthiest returns? Do you need to re-evaluate your margins, loan terms, cash flow and inventory? You could even benchmark yourself against similar businesses.
3. Keep pace with compliance. Did you know the flood levy will no longer apply after 1 July and tax-free thresholds are changing? Are your systems prepared for the introduction of carbon tax? If you operate a business in the building and construction sector, are your systems prepared for the annual reporting of contractor payments in 2013?
4. Meet payment deadlines. Be sure to pay your super guarantee contributions for the fourth quarter of 2012 by 28 July. If you miss this deadline, you must submit a Superannuation Guarantee charge statement to the ATO.
5. Claim deductions early. Take action to scrap worthless stock, plant and equipment before 30 June. Consider holding off buying business assets until the new financial year, because the instant asset write-off increases from $1,000 to $6,500 from 1 July. Conversely, there are several government initiatives valid only until the end of the financial year that allow business owners to write off purchases for business. Maximise these in the current financial year by purchasing any such assets before the end of June.
6. Write off bad debts. If any debts have been outstanding for more than 12 months and/or are considered non-recoverable, you may be able to claim a GST credit and write them off as an expense. Look into these now.
7. Back up your data. An ATO requires businesses to keep detailed records for a minimum of five years. Make sure you have secure data back-up. If you don’t use accounting software, consider starting the using a product that automatically backs up data.
8. Play it by the book. Lock in time to update your data entry and records at least once a week. Add as much information as you can in your financial records including accounts payable, receivables, payroll and inventory. Consider reviewing your books every two months. Identifying errors is easier over a shorter time period than after 12 months.
9. Set your house in order. Your transition to a happier financial year will be seamless if your financials are well organised and compliant. Up-to-date accounting software acts like a virtual assistant by automating many aspects, besides giving you a snapshot at any time. With ordered paperwork, you can avoid last-minute hiccups and nasty surprises.
10. Focus on your core business. Take the time to formulate a refreshed business strategy for FY2012/2013. It should contain everything from a SWOT analysis to competitor intelligence, a marketing plan and specific, measurable goals. These targets may be financial, such as increasing lead conversion by X%, reaching a revenue target at a specific time and halving operational costs. Or, they may be operational, such as expanding your product line, moving into another geographic region and raising staff skills. Consider involving team members in building the strategy to help improve their buy-in.
Tim Reed is the chief executive of MYOB, a business and accounting software maker. Click here to find everything you need to know about EOFY compliance changes.
