2nd June, 2021
Your EOFY prep processes may have gotten you over the line in previous years, but if the challenges keep building up, these processes may no longer be up to scratch.
Tax time is upon us.
For many Australian businesses, EOFY can be a headache, with reconciling accounts, sizing up tax obligations and preparing returns requiring significant effort and time investment.
If your business doesn’t have robust processes in place to manage these tasks, it can become even more complicated – which could mean errors in your returns or delays completing the required paperwork.
Is your business ready?
Even though businesses have a bit of leeway around returns – they must be submitted between 1 July and 31 October – it’s better to start preparing well before the end of the year. The earlier you start adding up the numbers, the easier it will be to complete an accurate return and get any tax credits you’re owed.
Aside from the legal obligations, the EOFY process can be a good chance to assess your financial performance over the past year, and plan for the next. If steps are delayed or it’s difficult to find the information you need, these insights could be hard to find.
A well-designed process means you have the data on hand, so reporting and returns are easy to generate. Your whole team will have access and knowledge, so they’re not scrambling to chase up numbers or struggling to collaborate on tasks. Most importantly, all your financial and tax details will be accurate – so there’s no need to redo work, and a lower chance of legal repercussions.
If you’re using older software (or multiple systems) and a range of manual processes to manage your finances, your EOFY process may not be as smooth as it could be.
Businesses that don’t have an integrated business management system can find it hard to pull data together and create accurate reports, which increases the risk of errors and the time spent double checking details.
Here are five signs your EOFY systems aren’t working.
If you don’t have a centralised business management system, it’s harder to manage all the tasks associated with the end of the financial year.
Instead, your business might have different people working on different tasks, without an overall plan. This can lead to key tasks being missed, people waiting on information and a lack of visibility around what has been completed. It’s not the most effective approach to an essential job on the business calendar.
The end of the financial year involves reconciling key financial data, generating reports to analyse aspects of your performance and creating a full tax return for your business.
If the data you’re using isn’t accurate and up to date, all these crucial reports and returns may be inaccurate and riddled with errors. This doesn’t just mean your business ends up basing decisions on inaccurate data, but that your tax details could be flawed – which can lead to legal consequences or financial penalties.
Data needs to be accurate, but it also needs to be accessible.
If you’re using different software systems to manage different parts of the business, you could end up with key data stored in multiple databases. This means, when EOFY comes around, you may have to track down numbers, transfer data between systems, refer to reports written earlier in the year and find workarounds if systems don’t ‘talk’ to each other. This can be hugely time-intensive – not ideal in a busy company.
If your EOFY process involves a large amount of manual work – entering data, reconciling numbers by hand, checking tax regulations, finding old invoices – it’s a sign that you don’t have the best possible systems in place.
Every manual task represents not just an opportunity for error, but a significant time investment for you or your staff members.
If you find yourself in a sprint to the EOFY finish line every year, something isn’t working.
Although it’s always possible to run into an unavoidable delay or error that needs to be fixed, you shouldn’t be scrambling to catch up every year.
A last-minute rush could be the result of slow manual tasks, disconnected systems causing errors, or a lack of cohesion across your EOFY process.
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EOFY comes with time pressures and complex tasks, which can make deficiencies in your systems more obvious. If your EOFY process is slow and error-prone, with many manual tasks and a lack of visibility, it’s a problem.
Slow, ineffective EOFY management isn’t just a waste of time, it can cause ongoing issues for your business – from poor decision-making thanks to inaccurate data, to delays submitting your returns, to tax issues caused by errors in your information.
Implementing a cloud business management system can be seriously beneficial for your EOFY process – and the benefits flow through to other parts of your business as well. It’s about creating a simpler, smoother, less time-consuming EOFY process – without that stressful last-minute sprint.
As the end of June approaches, it’s the perfect time to take a good look at your options – download our Critical Reports for Business guide to find out more about improving your EOFY reporting process.
The information in this article is general in nature, and not intended to be taken as financial advice. MYOB recommends consulting with an accredited tax agent or other professional advisor before finalising your EOFY plans. Find an advisor now.