It might not feel like it, but the end of the financial year is fast approaching, which means it’s time to start getting your finances in order.
The past financial year has seen various policies, laws and rules come into effect.
With this in mind, you need to make sure your books are in order and be prepared for the end of the financial year! Not sure what you need to do to prepare your business for the end of the financial year?
Our legal checklist provides a simple way you can ensure you’ve taken care of all your pressing legal obligations.
Read along and download our essential legals checklist!
1. Check if your business structure suits your circumstances
The EOFY is the best time to check if your current business structure suits your circumstances or whether you think it’s time for an update. For example, if your business is rapidly growing and expanding, you may want to change your business from a sole trader to a company. Depending on your business structure, the compliance and taxation regulations differ.
2. Check your business details – ACN, address, business name and TFN
Checking your business’s detail before the EOFY is important as it will indicate how your business is tracking. For example, if your business has grown, there is a high chance that you may have moved spaces which means your address has also changed. The reason to check your business details is that it promotes transparency with your stakeholders and customers.
3. Review and update your business and marketing plans
Reviewing and updating your business and marketing plans before the EOFY is important because it will provide insightful information on your spending, profits and business growth. Your business and marketing plans will guide your business’s future plans and improve decision making.
4. Check your insurance policies and premiums
For your business to be adequately protected, you should review your insurance policies at least annually or more frequently if your business changes. The EOFY is the best time to do this to ensure your business it’s always protected in case of any mishaps.
5. Check which business purchases are tax-deductible
Checking which business purchases are tax-deductible is an excellent idea to understand better what you can claim back. Some things that your business may be able to claim back are:
- Motor vehicle expenses
- Work-related expenses such as machinery, tools or computers
- Tax deductions for setting up a website.
One very important thing to keep in mind is that you need to have records to prove the expenses.
6. Follow up on any debts owed to your business
The EOFY is the best time to recover any unpaid debts owed to your business.
There are steps you can take to recover unpaid debts from customers or other businesses and measures you can take to reduce the chance of it happening again.
Key steps to include:
- Check contract terms for payment due dates
- Request payment in writing from the customer
- Maintain records of all customer correspondence
- Schedule regular payment reminders
- Send a formal demand letter
- If the customer still doesn’t pay, consider hiring a debt collector
- Take legal action if necessary
- Use the Personal Property Security Register (PPSR) to search for unpaid goods
7. Update your financial and business records
Reviewing your business finances with your accountant or bookkeeper may be a good idea. Examine whether you are meeting your targets and what you can do differently to enhance your performance.
To do this, you can use the Small business benchmarks tool provided by the Australian Taxation Office to compare your business’s performance against similar businesses to yours.
8. Do a stocktake of your business (if applicable)
Businesses that purchase or sell stock should determine whether they are required to do a stocktake. This is because it allows your business to keep records of all inventory sold, on hand or broken. For more information regarding stocktake, visit the ATO website. Even if your business isn’t legally required to do a stocktake, it’s always good to keep track of it.
9. Familiarise yourself with other business tax concessions
Did you know that businesses can access a range of concessions, including payment and reporting options? This applies to sole traders, partnerships, companies or trusts.
To qualify for these concessions, you’ll need to determine if your business is a small business entity for the income year.
10. Review your financial software and IT systems
Reviewing your financial software and IT systems is crucial to your business’s success because, without it, it can lead to bottlenecks impacting the flow of your business. Some common things to look for when reviewing your software and systems are:
- Whether your business’s bank account links to your accounting software
- Chart of accounts not reflecting business activity
- Employee details not correctly set up
- Third-party software not appropriately linked to the software your business uses
11. Review award rates for casual employees
The Fair Work Commission reviews the National Minimum Wage and the minimum rates under awards every year (Annual Wage Review).
Most changes begin on the first full pay period on or after 1 July. Whatever area of business you operate in, you should check the latest award rates for casual employees through Fair Work Ombudsman.
12. Review workplace policies
Checking your workplace policies is essential no matter what workplace or business you run. Over the past year, there have been many changes, and your business’s policies and premiums need to reflect these changes. Why? It will help clarify and reinforce standards expected of your employees and ensure that everyone is on the same page.
Now that you have a good understanding of the ways to best prepare your business for the end of the financial year, download our handy checklist to make sure you’ve taken care of all your pressing legal obligations.
Access this checklist for free