The end of financial year is June 30th, less than two months away. In the dynamic small business and hospitality space your end of year position can change right up until the last minute.
That doesn’t mean that there is no way to prepare in the coming weeks. With planning you know where you stand, what you owe and more importantly how to invest in new services or equipment.
Profit And Loss
Prepare a summary of income and expenses in a profit and loss statement. The profit and loss (P&L) statement is a financial statement that summarises revenue, costs and expenses incurred during a fiscal quarter or year. These records provide information about a company’s ability or inability to generate profit by increasing revenue, reducing costs or both. It is important to know how much you are spending and generating in terms of income prior to the end of the year.
If your business buys or sells stock, a stocktake will establish the value of your stock at the end of the financial year. You will need to do one if:
- your business turnover is $10 million or more
- your business turnover is less than $10 million and the difference between your stock level at the beginning and end of year is more than $5,000 (you can make a reasonable estimate to determine this).
If a stocktake is required, do it as close to June 30th as you can and keep the following records:
- a list describing each article of stock on hand and its value
- who did the stocktake
- how and when it was done
- who valued the stock and the basis of the valuation.
Based on this information you may decide to do a stocktake sale to boost sales or to create an offer to boost sales the final week of trading.
Record Of Debtors And Creditors
To ensure your records are correct at the end of financial year is it important to reconcile your accounts. Be sure that your debtor accounts are reconciled to your general ledger account. Ideally the total of your outstanding invoices equals the balance of your trade debtors account.
Like your debtors, your creditors also need to be reviewed and balanced to your general ledger account. Confirm that purchase orders are fulfilled. If the goods have been supplied, the order should be closed or turned into a bill for payment before the end of year.
Now is the time to find your records for purchases of new assets. Remember there is a $30,000 to $20,000, depending on the date of purchase, instant write off for small businesses. Also bear in mind expenditure on improvements to a business location can also be claimed so be sure to find those receipts as well.
Compliance For Tax and Reporting Requirements
Be sure to complete your personal income tax returns. Ensure that all lodgings for
PAYG withholding, fringe benefits tax (FBT), Goods and Services Tax (GST), and the taxable payments reporting is up to date. Of course, there are also superannuation considerations. Be sure that all of the year’s tax obligations are lodged and complete. This will make the end of year reporting much easier on you and your accountant.
2019 Here We Come!
It can be a bit stressful for business owners at this time of year. However, with online systems and cloud-based accounting it does make things easier. And if you are feeling really overwhelmed please get in touch with us for a quick end of financial year health check. There is no need to go it alone!