5 questions to ask your accountant before EOFY
I can’t believe I’m saying it, but end of financial year isn’t far away. I mean, I know it feels like we literally just had Christmas, but 30 June is looming so it’s time to start thinking about how best to prepare it.
30 June may be “just a date in a calendar”, but to business owners being proactive for their accountant could mean the difference between saving money in tax, preparing your financials in the best light for investors/shareholders, ensuring staff wages and payment summaries are issued with ease (and accuracy). Versus the alternative which would be paying unnecessarily high tax, having shonky financials and having staff query their annual payment summaries which is just highly embarrassing.
So before you hit 30th June and give yourself a high five for surviving another financial year, here are some things you need to be thinking about and discussing with your accountant:
- EOFY preparation does not start on the 30 June. It starts now. Yes, now. You need to make an appointment with your accountant to discuss your business performance so that should any changes need to be made, you have the time (and the cash flow) to do so. Plus it means you actually have time to understand what is going on in your business. If things are not working, you need to know that sooner rather than later.
- EOFY is not the time to go ‘accountant shopping’. An accountant is someone who you should feel comfortable talking about your business performance – both the highs and the lows. You need to be able to ask for their advice, you need to be able to understand their response and you need to feel like you are a valued customer. Shopping around for a discount accountant every year means that you are starting from scratch in the trust stakes, any new accountant doesn’t know your business history and you won’t have time for any vital tax planning. Sure, if your current accountant doesn’t suit your needs then you do need to look around, but try to find someone that suits your business for the long haul.
- Wages. Payroll. Employees. Gosh, if ever there was going to be a debacle at end of financial year, this is it. Normally, employees want annual payment summaries on 1 July. And you certainly don’t want to turn around to them and say “what on earth are you talking about”. You also certainly don’t want to push the button in your accounting software and give the payment summary to your employee without knowing what the heck you have just done. Wages need to be reconciled, tax needs to be reconciled and super needs to be reconciled. Surprises in this area after 30 June hits are never pleasant.
- Assets. Have you had any major purchases this year for things like office equipment, vehicles, computers or machinery? These need to be reported in a specific way in your accounts so have the discussion with your accountant before 30 June as to whether or not this has been done correctly. Assets should appear on your Balance Sheet, and small business owners are renown for never looking at this report, so it might be time to acquaint yourself with what this report actually means (and just how bloody useful it actually can be).
- Tax Planning. My theory is, if you have to pay tax, your business is making money. However my theory also is, I don’t want to pay more tax than what is required. So, you need to have a chat with your accountant so they can predict what your tax position will be. Yes, it is only a prediction – but it is better than ignoring the elephant in the room. Ideally this conversation should have been had during the year anyway, but again, your business can change rapidly if you accountant shop, chances are this discussion hasn’t happened yet. Having this discussion after 30 June is too late. Cash flow is so critical in small business that planning for any tax payments (large or small) needs to be thought out well in advance.
Most people see EOFY as a time to reflect on the past 12 months and see how you have performed. And while I do agree (to an extent), I also feel the biggest opportunity, which is often missed, is to use that historical data to make some changes to propel your business forward.
What trends are happening in your business? What tweaks can be made with pricing and customer mix? Is your advertising spend actually resulting in increased sales? Your accountant should be geeking out over your data and jumping at the chance to provide you with analysis to boost your business into the new financial year.
End of financial year should not be a scary time, but it is one that involves preparation, conversation and the right people on your team.