End of Financial Year – is it the end or just the beginning?

Okay, so this year is officially half over….or has it just begun?

In my case, I embrace 30 June as it means the new financial year is starting.  This means time to reflect on my business, and my clients businesses over the past 12 months and make sure those plans we have made are implemented to ensure the new financial year kicks off with a BANG.

Having financial goals and budgets in place are imperative to hit the ground running and achieving success.

So here are some tips I give to my clients to tidy up the financial year just ended and get ready for the new financial year:

  1. Create a workpaper file – I usually just get an A4 folder from Officeworks and use note dividers.  It doesn’t have to be flash – it just has to keep things organized. I use the first tab for reports, 2nd tab for Bank Reconciliation, 3rd tab for Sales Invoices, 4th tab for Expenses, 5th tab for “Queries/Other”.  That way when it comes time to do your tax return – you can hand a perfectly groomed folder to your tax agent (who will now love you), or you can lodge your return online easily with all supporting documentation present.
  2. Filing – find a system that works for you.  This could be cloud, hard drive, external drive, old fashioned folders – whatever, it doesn’t really matter, but ensure all your paperwork is filed by financial year.  This makes it easy if the ATO ever come for a visit.  You can instantly find the year required, and tell them to “go for it”.  If the system is computer based, ensure you have a backup tucked away in a safe location.
  3. Bank Statements – I always keep copies of my bank statements that come in the post.  I know you can download them, however I put them in a section in my workpaper file (see above).  That way if you need to prove that you have in fact paid for something, you have it handy all in the same folder as the receipts.
  4. Bank Reconciliation – essential for anyone with a business bank account, business credit card, business overdraft – or all of the above.  Don’t get lost in the hype of the cloud bank feeds.  Ticking things off in the bank feed does not necessarily mean your bank is reconciled.  In order to reconcile the bank, you need to physically match the bank balance in your software to the l bank balance in your bank account.  Trust me, some automatic bank feeds have errors.
  5. Payroll – Ensure you keep copies of any payment summaries issued to employees.  You never know when they will require a copy or you need to verify the amounts.
  6. Review your numbers – There are certain accounts your tax agent will ask about, so being prepared and proactive and preempting any questions is vital.  Things like General Expenses, Office Equipment, Meals & Entertainment, Networking Events, Repairs & Maintenance, Legal Expenses, Fines & Penalties, Travel Costs.  This is a start.  Some of these costs might be assets and not expenses, some might be mis-coded and need to be reallocated, some might not be deductible for tax purposes.  If your numbers don’t make sense to you – they certainly won’t make sense to anyone else.
  7. Be prepared – Write a list of questions or comments for your tax agent.  Ask them if there is anything else they need to know before you go and meet with them.  Write down things that have happened during the year that are out of the ordinary, explain why the numbers might have gone up (or down), explain if your circumstances have changed during the year (for example have you hired someone for the first time).  That way, when it comes time to do the tax return, they are not asking all these questions (and charging you by the minute).
  8. File the workpaper file somewhere safe – Once your tax return is lodged, you are still required to keep this supporting documentation for at least 4 years.  Put the folder in the cupboard and start a folder for the new year.  Never too early to be organized.
  9. Get on top of debtors early – Get a process to follow up outstanding customers.  If you have earned the money and performed the work, there is no reason for non payment – so don’t be afraid to follow up.  I know sometimes I get in excess of 100 emails a day – so it is quite possible someone has accidentally missed your invoice.  Waiting at home stewing over non payment which affects your business cashflow is wasted time and energy.  Ring them, discuss the invoice, if necessary arrange a payment plan – but don’t give up.
  10. Clear your desk and get organized for the new tax year – Having a cluttered workspace is not healthy.  Sort through your papers (you may even find some receipts for things you haven’t claimed).  The papers on your desk either need to be filed in the last year’s workpaper folder, left in your tray if they still need to be paid, or filed in the new tax year folder.  Keeping things neat means you are always on top of your business situation.  Nothing worse than finding an overdue bill under a stack of old scrap paper which you haven’t budgeted for.  Need some help – call Fiona from The Kettle Belles – home office organization is just one of her specialties.
  11. Don’t let yourself get overwhelmed – Sometimes the end of a tax year many business owners become overwhelmed and stressed with the realization that they haven’t kept on top of their bookkeeping work during the year.  It is never too late to ask for help, nor is it too late to get setup correctly for the new financial year.  Work with us to discuss how to streamline your numbers and take the pressure off – giving you back the time to run your business to its fullest.

As this is the busiest time of year here at Healthy Business Finances, I want you to know that I don’t try to do it all myself.  The past month has been huge and I have various people to thank:

  • Liz Thompson from Caliba for my fabulous rebrand. Amazing work seeing my idea come to life and very proud to now be offering Financial Coaching – some one on one work with business owners to really get them understanding their profit and business operations from a financial aspect (read my blog post about my rebrand here).
  • Keely Worth from Worth Designing – your help, assistance and guidance to get my website where I wanted it to be is much appreciated.
  • More amazing hand made cards from Sally at Sally’s Handmade Cars and Crafts
  • Some amazing treats to my clients to help celebrate end of financial year – Gingerbread Corner

So Happy End of Financial Year! May the next 12 months ahead bring you and your business happiness, wealth and enjoyment.

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