As the end of the financial year (EOFY) 2024 approaches, it's crucial for business owners to ensure their financial and operational affairs are in order.
The EOFY is not just about meeting compliance requirements; it's also an opportunity to assess the health of your business, optimise tax strategies, and plan for the future.
Here are some smart tips to help you navigate this critical period effectively.
1. Review Financial Statements and Records
Start by thoroughly reviewing your financial statements and records. Ensure that all transactions are accurately recorded and that your accounts are reconciled. This includes checking for any discrepancies in your income, expenses, assets, and liabilities. A clear and accurate set of financial records is the foundation for making informed decisions and meeting compliance requirements.
2. Optimise Your Tax Position
Tax planning is a key component of EOFY preparations. Consider the following strategies to optimise your tax position:
- Defer Income: If possible, defer income to the next financial year to reduce your taxable income for the current year
- Bring Forward Expenses: Prepay expenses such as rent, insurance, or office supplies to claim deductions in the current financial year
- Review Depreciation: Take advantage of the instant asset write-off and temporary full expensing measures to write off the cost of eligible assets
- Contribute to Superannuation: Make additional superannuation contributions to benefit from tax deductions.
Related: Why Tax Planning Strategies are an Integral Part of Business Growth
3. Conduct a Stocktake
If your business holds inventory, conduct a stocktake to ensure the accuracy of your inventory records. This process involves counting your stock, assessing its condition, and adjusting your records to reflect any discrepancies.
4. Evaluate Debtors and Creditors
Review your accounts receivable and payable. Follow up on overdue invoices to improve cash flow and consider offering early payment discounts to encourage timely payments.
Additionally, review your accounts payable to ensure you’re not missing out on early payment discounts from suppliers.
5. Plan for Cash Flow Management
Cash flow is the lifeblood of any business. Develop a cash flow forecast to predict your financial position in the coming months. This will help you identify potential shortfalls and take proactive measures to manage your cash flow effectively.
Consider strategies such as negotiating better payment terms with suppliers or setting up a line of credit for emergencies.
Related: How to Improve Your Business Cash Flow during Periods of Instability
6. Review Employee Records and Entitlements
Ensure that your employee records are up to date, including details of salaries, superannuation contributions, and leave entitlements. Verify that you have met all your obligations regarding payroll tax, PAYG withholding, and superannuation.
This is also a good time to review employee performance and consider any necessary adjustments to salaries or benefits.
Related: Smart Timing could Save You Money when Paying Bonuses to Employees
7. Assess Your Business Structure
Evaluate whether your current business structure is still the most tax-effective and suitable for your operations. Changes in your business activities, growth, or new opportunities might necessitate a different structure.
Consult with an accountant to explore options such as transitioning from a sole trader to a company or establishing a trust.
8. Leverage Technology and Automation
Invest in accounting and business management software to streamline your EOFY processes. Automation can help reduce errors, save time, and provide real-time insights into your financial performance.
Tools such as cloud accounting software, automated invoicing, and expense tracking apps can significantly enhance efficiency.
9. Seek Professional Advice
EOFY is a complex period, and professional advice can be invaluable. Engage with accountants, tax advisors, and financial planners to ensure you’re compliant with regulations and maximising your financial position. Our team consists of more than 40 tax and accounting professionals, led by experienced Partners from both Big 4, Mid-Tier and boutique, chartered environments, and can provide tailored advice and help you navigate challenges at the end of the year. Get in touch.
10. Plan for the Future
Finally, use the EOFY as an opportunity to set goals and plan for the future. Develop a strategic plan that outlines your business objectives, growth strategies, and budget for the coming year. This forward-thinking approach will help you stay focused and aligned with your long-term vision.
The EOFY can often be challenging time for business owners. By taking proactive steps to review your financials, optimise your tax position, manage cash flow, and plan for the future, you can ensure your business is well-positioned for success.
Remember, preparation is key, and leveraging professional advice can make the process smoother and more efficient. Get in touch.
Related: End of Financial Year 2024 Checklist for Businesses
Have you noticed our EOFY 2024 Tax Tips... here's one that relates to PAYG Withholdings
“Ensure all PAYG withholdings are accurate and reported. Keeping the ATO happy is key!”
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