Four Things Small Medium Businesses Should Do Before the End of Financial Year

Do you operate a small or medium business? If so, keep reading..

I am sure you are aware that the end of financial year is approaching fast. Are you still trying to work out whether you require some tax planning or unsure what need to be done before 30th June? Or perhaps you are choosing to do nothing as it has not been a great year for you?

Below is what we think we should do before the end of financial year.

1. Update your accounting data file

Is your “books” / accounting data file up to date? At this time of the year, it is very important to have this as up to date as possible. Ideally, your accounting system is an online based system with tools that can simplify this process for you / your bookkeeper. At the very least, your file should be reconciled up to the end of previous month AND that debtors and creditors have been recorded in the file. If your file isn’t up to date, then you will need to attend to this ASAP as this is the only way to know how your business is performing this financial year.

2. Review your stock / work in progress (if your business hold stock or has WIP)

It is important that you know the stock / WIP balances and the age of those items. Too much of it not only mean that it is locking up your cash unnecessarily, but also increases your profit figure for the current financial year. Have you also noted any old stock / WIP? Sell it (or invoice it if it is WIP). Identify the stock level now, and what is the stock level plan by 30 June?

3. Estimate income and expenses up to 30 June

2021 financial year is certainly different from other years. Your business may be affected by COVID restrictions, or the recent floods / cyclone, or your industry may have experienced a “boost” from COVID or direct/indirect govt support.

With such instability, only you can estimate the income and expenses over the next couple of months. With this information, we can put the pieces together to view your business overall financial performance & position, and cash flow as well as your estimated tax position before 30th June.

4. Plan for next year

End of a financial year also mean that a new financial year is coming. A lot of small medium businesses operate their business without planning or budget or forecast, and the only time that they may prepare budget / forecast is when the bank is asking for it.

If you have not done this, I recommend that you try doing this, and you will note the difference it makes for you and your business. It will help set the direction for your business and you will be able to visualise how next year is going to be. One other benefit for having this in place is that you can see the impact on your cash flow from your tax planning.

Time flies quickly, and it will be 30th June before we know it. End (and beginning) of financial year planning takes time, so contact us now and start planning for your business.