Did you encounter a costly mistake during the EOFY rush to get your finances in order? This isn't uncommon for business, but as we progress into the new financial year, there's no time like the present to reset, reflect and prepare for the year ahead so you can avoid the costly rush when tax time rolls around again next June.
By addressing these 5 common business mistakes and making necessary adaptions to your business practices to avoid them, you can rest assured that your business will be EOFY fit in 2023.
1. Have regular communication with your accountant
Hiring a professional accounting service firm is essential for any business. A proactive accountant will ensure you keep your business up to date with any accounting or tax changes and lodgements and will provide regular advice on how to grow your business to help you maximise your position at tax time.
Unfortunately, it happens all too often that businesses only call their accountants at the end of the financial year. At this stage, there is often a mad scramble to reconcile your accounts, make sure your lodgements are up to date, and to double-check all figures and accounts before the accountant can provide tax planning advice. This makes it virtually impossible for businesses to plan for the year ahead.
Regular contact with your accountant throughout the year helps to avoid any nasty surprises and financial reporting issues and ensures that EOFY will be a less stressful and overwhelming time. Engaging with your accountant frequently also means that you can receive accounting advice for your business throughout the whole year and will have the reassurance that your business accounts are up to date, with sound fiscal confidence all year round.
Related: How to get the Most out of your Accountant
2. Keep your accounts are up to date
Not keeping your business accounts up to date may seem like an obvious mistake, but it’s also a prevalent one that businesses make.
Reconciling a backlog of transactions can be extremely dreary and a drain on time and energy. It can also affect the accuracy of your financial data provided in support of your business financial statements. Not only this, but if you do not keep track of incoming and outgoing cashflow in your business, you can land your business in some difficult positions.
It's important that you have a clear picture of your profit and loss and a reconciled balance sheet so that you can make decisions throughout the year that support your business growth and potential.
This can be avoided by installing and using accounting software that is specifically designed for businesses to keep records and accounts. Also by employing experienced accountants in your business, or outsourcing to professionals will assist with making sure your finances are kept up to date and key lodgments with the ATO are met.
3. Use appropriate accounting software for your business and utilise it to its fullest potential
Accounting software is essential, especially for small and medium businesses who do not have an in-house accounting department. However, simply installing accounting software does not prevent errors. You still need to use the right accounting software for your business, and use it well.
When used correctly, accounting software can be hugely beneficial to ensure that business accounts are up to date, which makes the end of the financial year a much happier time for you and your employees. Software today is predictive, have add-ons to simplify your processing time and make reconciling and maintaining accurate and timely records easier.
Using this kind of accounting software can help you track cashflow, key expenditure, inventory, payroll, billing and invoice management and ATO payments such as GST and STP.
Related: A Guide to Outsourcing your Accounting and Payroll
4. Maintain accurate records and financial information to support your financial statements
Being unprepared can cause a multitude of issues when it comes to business finances.
Business accounts and records need to be reconciled and updated, whilst containing enough detail and supporting documentation.
The end of the financial year can be a challenging time for a business if this is not done, especially if you want to maximise potential deductions. Having sound and current knowledge of the expenses you can claim as a business is fine, but you will need the business records to support any lodgment with the ATO.
With a myriad of ways that businesses can make financial mistakes, the most important thing to remember is to keep your accounts, financial statements and records up to date. This is best done either by utilising the business accounting software or by enlisting the help of a professional accountant.
5. The new financial year is a great time to get professional help
As we move into the new financial year, you might want to consider hiring a professional accounting service to help you navigate your business through the year and outsource your accounting function. Making smart, timely and accurate decisions is essential to business continuity planning. Get in touch with our team.
Related: How to Transition from In-House Accounting to Outsourced Accounting?
Have you Have you noticed our #FridayExpertTips... here's one that relates to #Accounting
“It's important to keep track of your financial data on a monthly basis. It can help you see what areas of your business are increasing (or) decreasing. It will help you invest more in areas where your ROI is higher.”
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