Small Business Checklist for A Strong End to The Financial Year

Whether you are new to running your own business or have been doing it for years, the end of the financial year is a hectic time. Juggling bookkeeping, tax returns, and planning on top of your regular workload can result in long hours, with many SME owners struggle to find time in their workday to cope with EOFY administration and paperwork.

Taking a methodical approach to preparing for the end of the financial year – and starting early – will give you the best chance of completing your EOFY responsibilities without spending your nights in front of a computer after a hard day at work. While accounting and tax preparation may not be your favourite activities, getting a head start provides you the best chance of success.

Checklists are an excellent way to get things done, especially during busy times such as the end of the financial year (EOFY). Tick off each task as you complete it, and you’ll feel relieved that you’re making progress. Use the following ideas to create your own EOFY small company checklist. Every year, add any new tasks that you uncover that will assist you in finishing up one year and preparing for the next.

Prepare Your Key Financial Documents

The following financial documentation are required to be prepared before the end of the fiscal year:

-The balance sheet, which shows all of the assets, liabilities, and equity.

-The income statement, which shows revenue, expenditure, and profit.

-The cash flow statement, which shows the opening and closing cash balances for a certain period, as well as the inflow and outflow amounts. It’s a good idea to list the: operational cash flow (revenue and costs); cash flow generated by investments, such as assets purchased and assets sold; and cash flow generated by financial decisions such as loan repayment.

Small business owners should retain these statements on a monthly or quarterly basis at the very least. You want to know the state of your business on a regular basis so that you can prepare properly. For example, if you wish to expand, you must be aware that you can. If your company is starting to lose money, you want to know as soon as possible!

However, especially if your company is new, you may have put off gathering the information or getting it done. There is no better moment than the present.

Check for Bookkeeping Errors

The more careful your bookkeeping is throughout the year, the less work you will have at the end of the year. However, whether or not you have kept month-to-month accounting records, it is still necessary to reconcile your bank account and credit cards at the end of the fiscal year to detect any transaction irregularities.

Reconcile your Accounts Receivable and Payable

Use this reconciliation method to keep track of who owes you what and what you owe vendors. Payments for work completed this year should be chased up so that they are not left to be collected and taxed the following year.

Update Employee and Payroll Information

The end of the year is a wonderful opportunity to conduct an audit of all of your employees’ information. Do you have the correct phone numbers, addresses, and payroll information, for example? It also allows you to change the status of new hiring or former employees, including any access to computer systems or financial information they may have.

Perform an Audit And Physical Inventory

If you haven’t yet transitioned to using cloud inventory management software to manage what’s in your warehouse or shop floor, you may notice inconsistencies in your records. Examine your inventory or fixed assets to check that what is on paper corresponds to reality. Unless the slow-moving inventory is old, many suppliers are prepared to exchange it for something you can turn over more quickly on a regular basis. Because spreadsheets are prone to inaccuracies and do not provide a comprehensive picture of how your products are performing, consider the advantages of automating this operation with an inventory management system.

Manage your Tax Deductions

Keeping track of your expenses and receipts will make it easier to claim tax deductions. While you most likely already claim deductions for many of the expenses incurred in the day-to-day operation of your business, make sure you double-check what’s permissible each year. If you are based in Australia, go to the Australian Taxation Office’s Deductions page and carefully read the information for each business type. Maximizing your allowable tax deductions reduces your taxable income, so it’s worth taking the time to read the fine print.

Instant Asset Write-Off

Plan ahead of time and make any capital purchases that can be written off under the government’s rapid asset write-off program. The plan permits companies with less than $10 million in annual revenue to deduct the business component of an acquired asset. As a result of the COVID-19 crisis, the initiative’s asset purchase barrier has been raised from $30,000 to $150,000 for the 2019/2020 fiscal year.

Before you buy any equipment, it’s a good idea to consult with a tax accountant. They can advise on whether it is better to write off the asset immediately or depreciate it over time.

Superannuation

You should be aware of your employees’ superannuation. Making late payments is not tax deductible. Contributions are considered paid when they are received by the super fund, and late payments may result in the super guarantee charge, which is not tax-deductible.

Insurance Policies

The end of the fiscal year is an excellent time to renew insurance policies and ensure that they are up to date and will keep you covered. Public liability, professional indemnity, business interruption, management liability, cyber liability, tax audit, property, workers’ compensation, product liability, and car insurance are all required for businesses. It is preferable to be insured by the insurances required by your firm.

Back Up Your Data

This is recommended whether or not you store your financials in the cloud. EOFY is a great time to download backups of essential files and data and save them on a hard drive separate from your computer in the backup format of your accounting system. In the case of a system failure or emergency, you’ll be grateful for these safeguards.

Utilise Accounting Software

The majority of these checklist items will be significantly eased by the use of an accounting software system such as Xero. When data entry is automated, there is less chance for error and your books are always up to date. Online accounting software eliminates the need for frantic tax preparation, giving you more time to work on your business.

Audit Your Company Website

Many small businesses recognise the value of their website as a sales and retention tool, but once it is live, they don’t pay any attention to it. Your website should be a live thing that you revisit on a frequent basis to keep it fresh and relevant to your existing and future clients. Even basic changes like updating photos or headlines may keep your site looking current.

Plan and Set Up for Next Year

Once you’ve determined how your company did in the previous 12 months, use this information to plan. Ask yourself if you accomplished what you set out to do this year, where you can improve, and what lessons you’ve learned. Spending time reflecting and setting goals will help you save money and expand your business.

So, after you’ve balanced and closed your books, run your reports, and paid your commitments, it’s time to get down with an accountant and look over your reports and plan for your business. An accountant can help you with everything from cost-cutting to spotting potential growth prospects. Take the time to evaluate and develop goals for making and saving money, as well as growing your business.

We also recommend to revisit and update your business plan, as it allows you to determine whether the business landmines are where you expected them to be.

Final Thoughts

In the midst of the rush and bustle of doing business at the end of the year, don’t forget to make time for some small business housekeeping – it will be time well spent and will get your business in good shape for the new year.