According to a recent survey, 71% of small business owners and decision makers consider end of financial year (EOFY) a stressful time.
However, with a pinch of preparation, a dash of delegation, and a sprinkle of digital tools, you can take the stress out of tax time and get back to doing what’s important.
Get organised, stay organised
First things first, organisation is key. Create a system that works for you and stick to it. Here are some tips to get you started:
- Get some advice on tax planning: This is where your trusty accountant comes in. Tax planning can help you take advantage of opportunities to reduce (or defer) your taxable income, and therefore your payable tax for the year. It also involves estimating your taxable income for the year, so you’re prepared for what’s to come. After all, there’s nothing worse than a surprise tax bill. And just an FYI, tax planning needs to occur before the financial year ends to receive the maximum benefit.
- Ask your advisor for an EOFY checklist: A checklist can be your best friend during EOFY. It ensures you don’t miss any crucial steps or deadlines. Your accountant or bookkeeper can provide you with a tailored checklist of items to work through, otherwise, check out some great EOFY resources here.
- Create good habits: Streamline your processes for collecting and recording financial information. It’s also a good idea to regularly update your books and keep track of expenses to avoid last-minute scrambles.
- Delegate to team members: Don’t try to do everything yourself. If you have team members, delegate applicable tasks to them to lighten your load.
- Review your numbers regularly: Regularly check your financials — it shouldn’t be a once-a-year thing. Review your profit and loss statement to track your profit and see if there are anomalies that you need to look into. Reconcile your balance sheet regularly, including bank, credit cards and loans, debtors, creditors, and inventory. This keeps your financial health in check and prepares you for a smooth EOFY. Looking at it once a year and having to work back to items that may be a year old stretches the memory bank, and things can be missed!
- Monitor cash flow often: Keep a close eye on your cash flow — this doesn’t just mean the cash amount in your bank account. Remember, cash flow is made up of the movement in your profit and loss statement and balance sheet. This helps avoid any nasty surprises and ensures you have enough funds to cover your tax obligations.
Embrace digital tools
In the age of technology, digital tools are your secret weapon against EOFY stress. Here’s how they can help:
- Electronic receipts: Use tools like Hubdoc to upload and store electronic receipts. This not only saves time but also keeps your records neat, tidy, and accessible 24/7. Plus, your accountant will love you for it.
- Bank reconciliation: Reconcile your bank accounts regularly – at the very least, each month. This ensures your financial data is accurate and up-to-date, making payroll and BAS submissions a breeze.
- Payroll and STP filing: Use cloud accounting software to manage your payroll and end-of-year obligations, like Single Touch Payroll (STP) filing. This automates many of the tedious tasks, freeing up your time for more important matters.
Build your ideal app stack
Creating an efficient app stack tailored to your business needs can revolutionise your EOFY process. Here are some top picks:
- Hubdoc: Perfect for managing electronic receipts and keeping your documents in order.
- Xero: An all-in-one beautiful accounting software that handles everything from bank reconciliation to payroll and BAS submissions.
- Fathom: Use Fathom for advanced reporting and forecasting. It integrates seamlessly with Xero to provide deeper insights into your business performance.
- Deputy: A great add-on tool for managing more complex payrolls and employee scheduling. It also integrates with Xero to ensure smooth payroll processing.
- POS integration: If you use a Point of Sale (POS) system, ensure it integrates with your accounting software. This saves time and reduces errors by automatically syncing sales data.
Automate where possible: Automation can save you countless hours, so be sure to set up automated invoicing and reminders. If you are using multiple apps, it’s worthwhile setting up the integrations if available, so they talk to each other. This helps reduce time spent processing the same thing in multiple softwares, and improves accuracy.
Be ready for changes on 1 July
Preparation is not just about closing out the current financial year, it’s also about gearing up for what’s coming. Here’s what you need to know:
- Superannuation increase: From 1 July, the super guarantee rate increases to 11.5%. Make sure your payroll systems are updated to reflect this change. If you use Xero Payroll, this will be automatically updated for you.
- Award increases: Keep an eye on any award changes and adjust your payroll accordingly to stay compliant.
- Minimum wage increase: The minimum wage will also see a rise. Ensure your payroll is set to accommodate this increase.
- Tax cuts: Be aware of the tax cuts rolling through 1 July and make sure your payroll is updated for it.
5. Reflect and forecast
EOFY is not just about looking back, it’s also a time to plan ahead. Here’s how you can reflect on the past year and set yourself up for future success:
- Review the year that was: Take a moment to reflect on the past year. What worked well? What didn’t? Use this insight to make informed decisions for the upcoming year.
- Forecast to stay prepared: Use tools like Xero budgets or Fathom to create forecasts and set financial goals. This helps you stay on track and prepare for any challenges that may come your way.
Stress less, achieve more
By following these tips, you can significantly reduce the stress associated with EOFY. Remember, preparation and the right tools can make all the difference, and with the right approach, tax time can be a whole lot simpler. So, let’s go all in and make this EOFY the best one yet!
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