Small Business Checklist for A Strong End to The Financial Year
Checklists are a great way to get things done, particularly at busy times like the end of the financial year (EOFY). Tick off each task as you do it and you'll feel instant relief that you're making progress.
Use the below ideas to put together your own EOFY small business checklist. Each year add to the list any new tasks you discover that can help with wrapping up one year and preparing for the next.
Check for bookkeeping errors
The more meticulous your bookkeeping throughout the year, the less work you’ll have at year end. But whether you have maintained month-to-month accounting records or not, it’s still essential to reconcile your bank account and credit cards at EOFY to detect any transaction errors.
Reconcile your accounts receivable and payable
Use this reconciliation process to get on top of who owes you what, as well as what you owe to vendors. Chase up payments on work you’ve completed this year so as not to leave payments to be collected and taxed the following year.
Conduct an audit
If you haven’t yet switched to using cloud inventory management software to manage what’s in your warehouse or shop floor, you might find discrepancies in your books. Audit your inventory or fixed assets to ensure what you have on paper matches reality. Because spreadsheets are prone to errors and don’t give an overview of how your products are performing, consider the benefits of automating this task with an inventory management system.
Organise your receipts
Again, using an automated cloud storage option here is another time-saving plus. Rather than dragging out hard copies of your receipts at EOFY, use an app to take digital receipts or photos of receipts and store them away as they come in.
Know your tax deductions
Organising your expenses receipts will help with claiming tax deductions. While you probably already claim deductions for many of the expenses incurred in the day-to-day running of your business, make sure you check each year what’s allowable. Go to the Australian Taxation Office Deductions page and be sure to read the details for each business category. Maximising your permissible tax deductions minimises your taxable income, so it’s worth putting in the time to check the fine print.
Run financial reports
Your Profit-and-Loss (P&L) statement, balance sheet and cash flow sheet are three of the essential reports you want to run every EOFY. These reports provide a summary of the financial health of your business and are useful for informing budgeting and planning decisions.
Back up your data
This applies regardless of whether you store your financials on the cloud or not. EOFY is an excellent opportunity to download copies of critical files and data, saving them in your accounting system’s backup format on a hard drive separate from your computer. You’ll be thankful for these precautions in the event of a system failure or emergency.
Use accounting software
Most of these checklist tasks will be made considerably easier using an accounting software system like Xero. When data entry is automated, there is significantly less room for error, and your books are always up-to-date. With no need for mad scrambling at tax time, online accounting software gives you back time to work on your business.
Use the instant asset write-off
The Federal Government’s instant asset write-off scheme allows businesses with less than $10 million in turnover to write-off the business portion of a purchased asset. Whether it’s a vehicle, a piece of plant or equipment, the entire cost of the asset must be less than $20,000.
Keep up to date with tax changes
Stay on top of changes to tax law and know which small business tax concessions you may be able to benefit from. The Australian Taxation Office (ATO) small business newsroom is a useful resource for up to date articles and support.
Sign up to Single Touch Payroll
From 1 July 2019, the ATO expects all employers will sign up to Single Touch Payroll (STP). This follows on from the ATO ruling that SMEs with 20 or more employees must sign up.
Don’t be late making superannuation payments to your employees because they won’t be tax deductible. Contributions are considered paid when the super fun receives them, and missed payments may attract the super guarantee charge, which is not tax-deductible.
Review insurance policies
EOFY is an excellent time to review your insurance policies to check you’re still getting the best deal and to update your insurer of any changes in your circumstance.
Set up for the year ahead
Once you’ve established how your business performed over the last 12 months, use this insight to plan. Ask yourself whether you achieved what you intended this year, what areas you can improve upon and what are the lessons learned? Taking the time to reflect and set goals will help you save money and grow your business.
Introduce credit reporting as part of this action plan for improvement. SwiftCheck credit reports help protect your business from potential risk by alerting you to warning signs a customer may be in financial difficulties, such as defaults registered against the company, recorded legal action and how well the business pays their invoices.