5 tips to help Aussie businesses prepare for the new financial year
From preparing financial records for tax returns to wading through mounds of receipts and invoices to figure out what you can claim, it’s safe to say that the End of the Financial Year is not a good time for many Australian small business owners.
But, with July 31st having come and gone and the 2019 fiscal year officially over, now is the perfect time for Aussies to take stock and figure out the best way to tackle the next 12 months.
To help you with this, here are our top five tips on how to make the most out of the coming financial year.
Get up to date with the latest tax news
First things first, it’s vital that you’re aware of the tax changes that have come into effect since July 1st, 2019.
The biggest change you should be aware of surrounds the implementation of Single Touch Payroll (STP) to all businesses with 19 employees or less. Businesses have until 30 September 2019 to be STP compliant with the ATO.
The great news is that most payroll and accounting software are already STP ready and, once enabled, you’ll immediately be able to streamline your reporting process and remove much of the stress typically involved with handling finances.
Another key change every Aussie small business owner should be made aware of is that the instant asset write-off scheme has been increased to $30,000, and has been extended to the 30th of June, 2020.
What this means is that small businesses will be able to claim deductions for any asset that you purchases within the 2018-2019 financial year.
For further information about major tax changes that every small business owner should know about, make sure to read our article here.
Write yourself a killer business plan
Before you put away all your newly organised financial records away, why not take advantage of the situation to help you plan for the year ahead? Now is the perfect time to take a good, hard look at your data and take an objective look at what you did well, and where you can improve by creating a killer business plan.
We know that for many time-strapped business owners the idea of writing a business plan is something that fills them with dread and frustration. But, we can assure you that taking the time to put a plan onto paper will be one of the best business decisions you’ll ever make.
A business plan will be your roadmap, keeping you accountable of your goals and aware of potential challenges and opportunities ahead.
While there aren’t any hard and fast rules when it comes to creating a business plan, it does help to include things like:
Write a few short paragraphs on what your business’s goals and values are. Examine your business from an outsiders point of view and think about who your customers are, what the market and industry is like, and where your business fits in.
A SWOT analysis is a simple exercise designed to help you identify the Strengths, Weaknesses, Opportunities and Threats of your business. You can apply this virtually every part of your business from the entire business itself to individual projects.
Sales and Marketing plan
This is a good opportunities to assess things like your pricing strategy, idea to improve sales and your marketing efforts.
Operating plan: Every business has operating costs from owning retail space to purchasing supplies and staff. Look over your financial records and see if you can spot any opportunities to lower your operating costs.
Perhaps the most important part of your business plan, your financial strategy basically outlines everything from profit-loss statements to cashflow predictions. This is the perfect opportunity to reassess what your financial goals are and how exactly you’re going to hit them.
Set yourself successful business habits
This past fiscal year has seen Australian athletes dominate the world stage with superstars like Hannah Green coming out on top at the Women’s PGA Championship, Ashleigh Barty becoming the number one ranked WTA tennis player in the world, and surfer Sally Fitzgibbons also enjoying her new ranking as number one in women’s surfing.
Why do I bring this up? Because the key to being successful in sports in the same as business successful in business: having good habits.
While it might be okay to make mistakes when it comes to finances, because hey they happen, it isn’t okay to be making the same mistakes over and over again. Don’t make the mistake of falling back into the old habits that are holding you back, and take the opportunity to develop some good financial habits instead.
One of the best financial habits to get into is to start getting into the practice of regularly updating your budget.
Many small business owners neglect keeping an eye on their budget and are constantly left surprised and frustrated anytime expenses like bills and wages roll around. Make it your mission to review your finances every fortnight or, at the very least, every month so you know exactly what to expect and prevent yourself from overspending.
Other great financial habits to consider adopting are to start tracking your spending using mobile apps like Quickbooks Self-Employed, and even instituting a “24-hour rule” for all major purchases is a great way to cut back on overspending as described by George Kruger, Co-founder of BIGG Success:
“If you need to make major purchases, give yourself time to think it through by following a 24-hour rule. For example, you’re shopping for a new TV. You know what you can afford, but the one you want is out of your range. You get excited and emotions take over. You can avoid this situation by taking 24 hours before making a major purchase, to give yourself time for logic to return. The best financial decisions are driven by logic, not emotion.”
Begin embracing sustainability
These days, Australian consumers are becoming more and more concerned about issues like sustainability and the environmental impact of the businesses they shop with. With a recent survey by HP and Planet Ark finding that 80% of the national population hold businesses accountable for their environmental impact, and 71% are willing to pay extra for sustainable products.
We can already see this trend affecting Australian businesses with major corporations like Woolworths, Target and Bunnings all adopting more environmentally-friendly initiatives like phasing out single-use plastic bags.
For Aussie small business owners, this is a perfect chance to both satisfy customers and become more environmentally friendly. Take advantage of government grants and programs like the Communities Environment Program which awards up to $150,000 to fund projects that address local environmental priorities, or the ACTSmart Business Recycling Program to gain access to free and efficient recycling programs to reduce operational costs.
Look around for different ways you can incorporate sustainability into your day-to-day operations without breaking the bank, like this Australian florist who began only selling locally-sourced flowers or how a Melbourne-based marketing agency began a composting program to cut down on their carbon footprint.
Start mastering cashflow
For small businesses that already run on razor-thin profit margins, making sure that you have a consistent stream of cash coming in is a constant struggle. But that doesn’t mean that it always has to be this way. There are a handful of things that every small business can start doing to reduce their cashflow woes, and even get rid of them entirely.
The very first thing every small business owner needs to start doing is to start figuring out where their money is coming and going. Instead of inputting hundreds of details and formulas into a spreadsheet, take advantage of accounting software to generate reports and forecasts to help you get your finances under control.
Save yourself time and energy by introducing automation into your invoice process. Instead of spending your time constantly chasing up after late payments, let your invoicing software take care of that for you. With something like Quickbooks Self-Employed you can easily create a system that automatically sends reminders to customers before and after payment is due.
If you’re finding yourself without the time to spare going over your finances, consider hiring a specialist to take a look at the books for you. Figure out if you need a bookkeeper, an accountant, or a financial planner as each one serves a different role. For example, you should bring on a bookkeeper if you need help maintaining financial records, whereas a financial planner can help you figure out potential investment opportunities and create a plan for managing your budget.
The end of the financial year can be a stressful time for many Aussies, but it’s also a time to reflect and take stock of all that you’ve achieved. Make sure you use this time to celebrate your wins and set yourself up for even more success by the time the next year rolls around.
Source: QuickBooks Australia