Plan for a Strong Financial Year Ahead
At the end of a financial year, have you ever noticed the accountants with an extra spring in their step, a big grin on their face thinking about how they’ve got balance sheets and transactions to code for their clients?
You may not greet this time of year as joyfully as an accountant. Although it needs a bit of extra time, facing another 30 June, just like New Years Eve, means you can reflect on the year past, and take stock of your successes and hard times. What worked? What didn’t? How can you strengthen your business?
A lot of businesses make the mistake of repeating past slipups, so before you hand your money over to the ATO, consider how to maximise on your tax refund and keep your business happy and healthy.
1. Review your business story
How has your business changed in the past year? As your business matures and evolves, consider any developments you’ve made and if this has now changed you goals. How can you meet these goals?
Often, businesses forget to look at their systems and processes. Whilst it can be a tedious task to review or implement a new way of doing things, the long-term benefits of implementing something that will save you in time, is a business win.
2. Implement Success Measures
How do you measure your wins and losses? You and your accountant can set up measureable, key performance indicators (or KPIs) for your business to help you be specific about your goals and help you track your progress throughout the year.
For example, rather than having the goal of “business growth”, set a measurable KPI of “increasing profit by 8%” and track month-by-month.
3. Punch above your weight
You’re probably already keeping an eye on your competitors but you should also consider competing with larger businesses. This will depend on your business position, but if you decide to try and level the playing field, you can implement strategies by either appearing bigger than you are, or selling how you are different to the big brands.
4. Cashflow is still king
Did you get your invoicing right this Financial Year? If cashflow wasn’t where you wanted it this past 12 months, consider your invoicing methods.
A good invoicing accounting system can send out automated due invoices as frequently as you like and track where your accounts are up to. If your customers were slow to pay this year, look at ways to increase your energy on chasing up debtors.
5. Know your stuff from 1 July For Small Business
Since the release of the new budget, the government has announced that from 1 July 2016, the threshold for a business being considered a small business for tax purposes will increase from the current $2m to $10m.
This means that companies, who have previously not been eligible, can now apply for small business tax cuts and can access write-offs for assets up to $20,000, giving your business a better return on your tax refund.
The new small business thresholds also includes agribusinesses, now giving farmers access to new tax incentives and write-offs for agribusiness assets in some situations.
If you’re just starting out, from 1 July, small business entities can also immediately deduct a wide range of start-up expenses, such as professional, accounting and legal costs.
6. Changes to Super
The new financial year, is a perfect time to think about your future nest egg, and with the changes proposed in The Government’s Budget, you may need to consider substantial structural changes to your super.
One of the various changes that have been proposed by the Government, is to remove the tax exemption from a Transition to Retirement Income Stream (TRIS), which is where a person’s pension is drawn from super and paid as income. The backdated 15% tax on this income could have a huge effect and we recommend contacting your local Financial Planner to discuss implications and options.
7. Timing is everything
The 30 June deadline is not the drop dead date of payment for everything. Expenditure for consumable items can be prepaid before the end of the year, provided that the items are to be used within the next 12 months.
Items for businesses, as well as agribusinesses, such as stationery, fuel & other consumables can be prepaid and a tax deduction is available.
8. Bring in the professionals
A lot of businesses make the mistake of using their accountant as someone they talk to 1-3 times a year.
A good accountant should do more than tax advice, and provide you with ongoing business insights, advice and support continuously throughout the year.
It’s good to have knowledge sooner rather than later so you can be smart with your money and avoid any nasty surprises come 30 June, so look at your accountant as an integral “cog” in your business machine.