Cafe owner Deb Hallyburton and accountant Simon Brown of RSM Australia have been working together for six years now. When they met, Hallyburton was new to the world of business, but knew she wanted to open an eatery called The Good Egg Cafe in her home town of Busselton, Western Australia.
“It initially opened as a tribute to my late husband, who passed from brain cancer – he had passed a year when we opened the doors,” Hallyburton says. “It’s called The Good Egg because he used to call everyone a ‘good egg’ when he was sick. And we donate 5% of our proceeds to brain cancer research.”
Over the years, with Brown’s support, Hallyburton has developed the cafe into a thriving business on a mission to do good.
What advice can they offer small business owners?
“Listen to your accountant, that’s step one!” Hallyburton says.
When it comes to getting ready for the end of the financial year (EOFY), Hallyburton and Brown have plenty of pearls of wisdom to offer. Here are their tips for taking the stress out of EOFY planning – this year and beyond.
1. Check in regularly with your accountant
Deb Hallyburton, owner of The Good Egg Cafe
To really get the most out of your finances, you need to be on top of them all year round. (If you’ve missed the boat this year, don’t worry; this is a great time to get organised for FY24).
Brown says: “Tax planning is a 12-month process – it really should be conducted all through the year.”
He and Hallyburton have bi-monthly consultations, in which they update her taxation estimate so there are no nasty surprises when the EOFY bill arrives. These regular meetings are also a great way for Hallyburton to stay across everything else she needs to be aware of, such as other financial obligations, or ways to take advantage of relevant tax breaks or incentives.
“I’ve had to learn all this – I’ve come into business pretty green,” Hallyburton says. “I have a really great relationship with Simon, and he’s definitely all over things more than me, so I find our meetings are very important. He’ll tell me, in layman’s terms, what I need to do to get a better financial outcome.”
Every business owner will find their own rhythm with their adviser – but the key is to be consistent.
2. Nail your accounting
Simon Brown, RSM Australia
Now is also the perfect time to ensure all your accounting is accurate, up to date and as pain-free as possible. This means putting in place some practices that will allow you to move smoothly through the next financial year.
“One of my biggest tips to small business owners is to stay organised and streamline your accounting with digital programs, like Xero, which make life so much easier,” Hallyburton says.
“I reconcile my accounts [confirming that bank account transactions match business accounting records] every couple of days to make sure everything matches up so I can identify any problems early. If you’re like me, I forget what I did yesterday! So by spending around 10 to 15 minutes a day to make sure everything is in order, it saves me so much time [down the line].”
Hallyburton, her accountant and her bookkeeper all have access to her Xero account, which makes it easy for everyone to jump on remotely and see what’s going on.
Brown has even built Hallyburton a custom management report within Xero that creates key performance indicators for her to hit. You can also use Xero Analytics to build short-term cashflow projections, store copies of important documents (such as bills and receipts, which can be automatically captured with Hubdoc) and keep all your invoices in the one spot with Xero Files – something that’s crucial for claiming expenses at EOFY.
Brown says: “I’m a big believer in getting the reporting in Xero right, so that the client has access to it all the time.” As for business-as-usual activity: “The budget and management process should be ongoing,” he says.
3. Expend before the year end
You’ll want to ensure all your deductible expenses are paid for before year end, so you’re able to claim them at tax time. What you can claim depends on your business and industry but could include items such as necessary workplace equipment and charitable donations.
A big one to be on top of is superannuation contributions, which can be tax deductible. Hallyburton ensures her super contributions are made by 15 June, so they’re received by her fund in time for the EOFY deadline. Brown adds that you’ll also want to make sure you’ve paid your employees’ super – “because it’s only tax deductible when paid on time. And the penalties for not paying on time are horrendous.”
You can also claim staff bonuses as deductions, so long as you get them in before the 30 June cut-off.
4. Do a stocktake
If your business buys or sells products and physical goods, you’ll probably need to do a stocktake before the end of the financial year. A stocktake can be financially advantageous, as damaged or outdated stock may be used as a tax deduction. Beyond that, it’s also a great way to review your inventory levels and plan ahead for the new financial year.
“Ask yourself, what stock am I holding?” Brown says. “Do I need to increase the stock that turns over quickly? Or do I need to reduce certain inventory levels on the stock items that aren’t turning over very fast?”
To make her stocktake as simple as possible, Hallyburton ensures her stocktake template (available in Xero) is up to date before EOFY rolls around.
5. Review outstanding invoices
Lastly, now’s the time to chase up any unpaid invoices.
“Review any of your old debtors, follow up to get paid, and maybe look at whether there are any who you need to reconsider working with,” Brown says.
Even if those debtors don’t come through, you’ll at least ensure that you’re not including the money you’re owed in your income reporting, and therefore paying tax on it.
Ultimately, by getting the right tools and systems in place now, and making your accounting an ongoing process, you’ll make your next EOFY as easy as can be. Once this financial year is squared away, it’s time to start thinking about the next one.
Tackle the end of the financial year with support from Xero.