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End of Financial Year: The 15-Point Checklist for Small Businesses

Is your small to medium-sized business (SMB) ready for the end of financial year (EOFY)? Wherever you’re at in your prep, here’s a helpful EOFY checklist – complete with tips for setting your business up for success in the new financial year.

With travel returning and customers heading back to brick-and-mortar shops, 2022 has already been a busy calendar year for many SMBs. But, with the end of the financial year upon us, it’s a good time to ensure everything is wrapped up and you’re in good stead for a new financial year. 

It’s important to check with your tax advisor for the most up-to-date information that fits your individual business, but the following EOFY checklist can be a good place for small business leaders to start.

1. Donate to Not-for-Profits Who Share Your Businesses’ Values

Let’s start with the most rewarding step first! It’s a great time to up the philanthropic level with the obvious tax benefits of doing so helping leverage your contributions. Always check not-for-profit status for deductibility before committing.

2. Expense Advancing or Deferral

See what expenses you can delay versus what you can bring forward based on your profit and loss aims. Note: if your tax is on a cash basis, this may not work if you haven’t also paid for the goods and services. The best trick here is to run a trial balance from your accounting system and step through each line considering if there is something you can do to affect that line.

3. Switch Accounting Systems (or Trial a New One!)

The start of July is a great time for simpler business models to switch accounting systems. For larger businesses, consider a parallel trial where an existing accounting system can run side-by-side. You then cease using your old system once you’re confident your new system is working well.

4. Set Next Year’s Budget

Your activity next month is probably mostly locked in from an expense perspective. Budgets should be set well before EOFY. Look at variances to last year’s budget. Set your targets for sales, production and services activities.

5. Review Key Performance Indicators (KPIs)

Go over your business KPIs to ensure you have a good backward, present and forward-looking set for each area in your business. If you don’t have systems in place that enable a data driven culture in your business, then consider whether a solution like a customer relationship management (CRM) platform can help you create a central, scalable, and customisable foundation for digitisation. Check out our CRM Handbook for more information specific to small businesses.

6. Policy Check

Do a policy check on matters such as revenue recognition, project payments, credit risk on customers and ensure that you have these optimised for cashflow and taxation purposes.

It’s important to remember that the right digital solutions and platforms can be critical for minimising the risk of human error and ensuring processes work as efficiently as possible. If you’re not already digitising elements of these policies or processes, consider developing a technology roadmap to help your business move toward faster, more scalable practices.

7. Inventory and Products

Do a stocktake to capture write-offs, write-downs and write-ups. At the same time, look at the age of your inventory, stock turn rates and, most importantly, if you import or export, the foreign exchange (FX) risk associated with the current spot FX prices versus what you transacted at. Reconsider if you should (or can) remain in the Small Business Tax regime or look at leaving if it works out for the better.

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8. Get Digital and Physical Paperwork in Order

Ensure you have digital or physical copies of expenses and card/bank statements for the year. The new year gets busy and you won’t want to be pestering staff and management for copies of statements and receipts when they are trying to get the new year off to a cracking start. Your accountant may need all this to get the tax returns done and substantiate claims. 

If you’re still working with a heavy amount of paperwork, consider that a majority of SMBs — a whopping 75% — say that digitising and updating operational processes during the pandemic have made their businesses stronger in the long run.

9. Reconciliation

Major accounts should all be reconciled. Bank accounts, company credit cards, GST/VAT accounts, assets, payables and receivables.

10. Review Leave Liabilities

Many small businesses run these liabilities unfunded. Setting up an account to hold funds for this purpose can work if you have available capital to do so. It’s also worth checking if you have contingent liabilities not booked. For example offering access to products or services that are ongoing and without expiry have a perpetual profile and thus may require a liability to fund delivery for life.

11. Review Product Prices

Pricing adjustments are often easiest at EOFY. With inflation continuing to weigh on pricing adjustments, it’s an important time to reevaluate. Don’t rule out dropping prices wherever appropriate. The commodification status of your industry product or services sets the tone for price hikes versus cuts.

12. Foreign Exchange Tax and Risk

Look at FX gains and losses and what you need to realise. Do this with your advisor and along with ATO published rates you can work this one out together. You should also discuss FX risk in your business model. If you import or export you are very likely to have FX risk. Consider hedge strategies with your advisors and bankers for future years.

13. Payroll Compliance

Start collecting data required to prepare staff payment summaries. Old data can cause incorrect Payment Summaries. You need up to date names and addresses. Check your wages thresholds against state limits.

14. Review Regulatory Changes

Many regulatory changes occur at the end of the financial year. Review the main government websites such as ato.gov.au, fairwork.gov.au, asic.gov.au and the various state revenue offices for payroll and state taxes.

15. Double Check Your Eligibility

Check for Small Business Tax (SBT) regime eligibility, Payroll tax rebates such as offered by the NSW Government on new hires, R&D Tax concessions, Government Grants and other programmes and benefits you could get involved in, to help your tax and funding position.

There are other things to consider at a personal level for owners and staff not discussed here. The above is a general consideration list for smaller businesses and those with simpler business models. For a complete and thorough review, make sure to approach planning and structuring with the help of your tax advisor.

Many of these steps depend on digital processes and tech-enabled strategies. Make sure to check out our free CRM Handbook for SMBs and get tips for making this next financial year your most successful yet.

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Note: this piece was originally published on 4 July, 2013, and has been updated.

Salesforce Staff

The 360 Blog from Salesforce teaches readers how to improve work outcomes and professional relationships. Our content explores the mindset shifts, organizational hurdles, and people behind business evolution. We also cover the tactics, ethics, products, and thought leadership that make growth a meaningful and positive experience.

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