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End of Financial Year Preparations – Race to the Finish Line
At this time of year, we find ourselves having regular discussions with clients about best business practice for end of financial year preparations. This can include end of year payroll, transitioning to cloud-based software for the first time, changing software providers, or simply reviewing data file accuracy. The key for business owners is to be proactive in improving your business, particularly with regards to profitability, ongoing business growth, improved business efficiencies and capacity. This is especially relevant in the lead-up to EOFY – read on to find out what you can do between now and 30 June.
EOFY Data File Review
Typically, we recommend clients carry out a Data File Review every year. The key benefits of a data file review and cleanse prior to the end of the financial year are:
- Accuracy: A data file review and cleanse can help to ensure the accuracy of your financial data. This can help to prevent errors and ensure that your financial records are up to date.
- Compliance: By reviewing and cleansing your data files, you can ensure that you are complying with any relevant legislation and regulations. This can help avoid the imposition of penalties and fines.
- Improved efficiency: A data file review and cleanse can help to streamline your financial processes and improve efficiency. This can save you time and money in the long run, as you will be able to process your financial transactions more quickly and accurately.
Annual Forecasting & Business Planning
What does the future look like for your business? You don’t need a crystal ball to give yourself a pretty good idea of what the future holds. Accounting for what you already know and factoring in various scenarios can aid in your end of financial year preparations, as well as for budgeting throughout the rest of the year. Having an annual forecast and budget in place can do the following for your business, and you as a business owner:
- Set goals: Business planning and forecasting can help you set clear and achievable goals for your business. It provides a roadmap for your business and helps you stay focused on your long-term objectives.
- Identify potential risks and opportunities: Through business planning and forecasting, you can identify potential risks and opportunities for your business. This allows you to take proactive measures to mitigate risks and capitalise on opportunities.
- Make better decisions: Business planning and forecasting provides a basis for informed decision-making. By having a clear understanding of your business’ financial and operational performance, you can make better decisions about investments, expenditures, and other key business activities.
- Improve resource allocation: Forecasting allows you to anticipate future demand and allocate resources accordingly – ensuring your business has the resources it needs to not only meet demand – but grow as well.
- Develop a financial plan: Business planning and forecasting provides a framework for financial planning. By having a clear understanding of your business’ financial performance, you can develop a budget, manage cash flow, and plan for future investments on a personal level.
- Monitor performance: Your business’ progress towards established goals and objectives can be more accurately measured using thorough forecasting and business planning. This allows you to adjust as needed to ensure that your business stays on track.
Be sure to check out our article here for a more detailed look at forecasting.
Business Improvement Planning
When was the last time you considered what could be improved within your business? With the increased capability of technology and a labour market stretched thin, we recommend business go through a business improvement process every 3-5 years – but it’s particularly relevant as part of your end of financial year preparations. This time frame may vary depending on the industry and economical factors that are not within the control of key stakeholders.
When reviewing a business improvement plan, there are several key items to consider. Here are some of the most important factors to keep in mind:
- Business goals and objectives: Start by reviewing your business’ goals and objectives. Are they clear, measurable, and achievable? Do they align with the overall vision and mission of your business? Make sure that the goals and objectives are well-defined and can be tracked and measured over time.
- Performance metrics: Review the key performance indicators (KPIs) that are being used to track progress towards your business’ goals and objectives. Are the KPIs relevant and meaningful? Are they being tracked and reported regularly? Are there any gaps in the data that need to be addressed?
- Action plans: Examine the action plans that have been developed to achieve your business’ goals and objectives. Are they realistic and achievable? Are they aligned with your business’ resources and capabilities? Are there any gaps in the action plans that need to be addressed?
- Resource allocation: Review how resources are being allocated within your business. Are resources being allocated in a way that supports the achievement of your business’ goals and objectives? Are there any areas where resources could be better allocated to improve performance?
- Risk management: Evaluate how risks are being managed within your business. Are risks being identified and assessed regularly? Are there risk mitigation strategies in place? Are there any emerging risks that need to be addressed?
- Stakeholder engagement: Consider how stakeholders are being engaged in your business improvement process. Are stakeholders involved in setting goals and objectives? Are they being kept informed of progress and results? Are there opportunities to increase stakeholder engagement?
- Implementation: Evaluate how well your business improvement plan is being implemented. Is there strong leadership and commitment from management? Are employees engaged and motivated to achieve your business’ goals and objectives? Are there any barriers to implementation that need to be addressed?
By considering these key items when reviewing a business improvement plan, you can identify areas for improvement and take action to ensure that your business is on track to achieve its goals and objectives. McKinley Plowman’s Operating Rhythm service addresses the above issues and more, to ensure your internal operations effectively support your goals.
2023 End of Financial Year Preparations: Key Items to Review
Consider the below a checklist of the key things to review in your business before 30 June arrives:
- If you pay wages, are you STP Phase 2 compliant? This includes if you have paid wages earlier in the year but are no longer paying wages then there is still a requirement to register for STP Phase 2 and report and finalise employee payroll through an approved STP Phase 2 provider.
- STP Finalisation is due to be submitted to the ATO by Friday 14 July 2023.
- Are your lodgements up to date? If you are behind on ATO obligations, then it is recommended that these are brought up to date to ensure your business remains compliant.
- Super Guarantee increases to 11% effective the first payroll in July 2023, majority of cloud based STP software companies will automatically update this percentage but we recommend you check this across all employees to ensure your business remains compliant from the outset.
- Are your employees employed based on a Fairwork (Federal) or Wageline (State) award? It is imperative that any applicable awards are reviewed during June and July as changes to rates typically occur at the commencement of the new financial year and will need to be reflected in your payroll where required.
- Taxable Payment Annual Report (TPAR) requirements: If your business is in any of the following industries, you may be required to lodge a TPAR to the ATO by 28th August 2023:
- Building & Construction
- Road Freight & Courier Services
- Information Technology Services
- Security, Investigation or Surveillance Services
Most cloud-based software will allow for these reports to be lodged electronically. If you are required to complete a TPAR, you will need to ensure you have the following details of all of the contractor payments made throughout the financial year.
- Contractor’s Business Name
- Business Address
- Contractor’s ABN
- Date of all payments
- Details (Invoice number)
- Amounts Paid (GST amount and total including GST). Where GST is not applicable the amount to be reported is $0.00.
- Payroll Tax: If your business payroll exceeds either the monthly threshold of $83,333 or the annual threshold of $1 million you will need to register for payroll tax through Revenue online. If you require clarification on this, McKinley Plowman has a specialist team that can assist with a review.
The Time to Act is Now!
30 June is right around the corner, and we understand that as a business owner, you have many competing demands aside from end of financial year preparations. Our team of specialists across the firm can assist with the items we have outlined above – so if you’re time-poor but ready to prepare your business for success at tax time and into the future, contact us today on 08 9301 2200, or contact us via our website and we will be more than happy to assist.
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