Your end of financial year checklist31 March – it’s Ewan McGregor’s birthday, the anniversary of the official opening of The Eiffel Tower and World Backup Day. But if you are a small business owner, 31 March means only one thing: financial year-end – and it’s probably the only time of the year that you wish you weren’t your own boss!
The lead up to the end of the financial year is always busy, often stressful and sometimes confusing. Our advice? Take a deep breath, start your preparations early and celebrate when done.
Here’s our end of financial year checklist to help you get all your financial ducks in a row:
• Write off bad debts – If you think you are unlikely to get paid, write the debt off before the end of the financial year. That way, at least it will be tax deductible. You can still chase payment, just include it as income when you receive it.
• Take stock of your inventory – The value of your stock affects your business’s taxable profit position. Do a thorough stocktake before year end to get rid of any damaged, out-of-date or obsolete stock – then write it off to save tax.
• Review your asset register – Do you have any assets that are surplus to your current requirements? If you do, ditch them. Ideally, sell them, convert them to cash. Other surplus assets can be written-off come tax time.
• Spend sooner rather than later – Business purchases made before 31 March will reduce your taxable income. So if you need to buy any new equipment or assets, do it sooner rather than later. It also means you can claim a month or so of depreciation. But don’t go crazy – just the stuff you need.
• Claim your expenses – Remember, expenses need to be supported by invoices or receipts, which can be hard to keep track of. If you aren’t already, try going digital – scan receipts and save electronic invoices on an external hard drive or in the cloud. It saves time and space.
• Get everything up-to-date and file on time – Have your accounts up to date and tidy up the loose ends. Also you wouldn’t waste your profits on swimwear for otters, so don’t waste it on interest and penalties. File your return on time and avoid unnecessary expenses.
• Reward your staff – Best by the financial year-end.
• Know when to ask for help – Get in touch with your accountant or bookkeeper early. They are in the best position to advise what you can claim for and what you can’t. Remember tax time is busy for them too, so the more prepared you are, the smoother the process, and the better the result.
• Plan for next financial year – How did your financial year-end go? Were your ducks organized and orderly? Or where they confused and chaotic? How much toing and froing was there between you and your accountant? Take some time to review and think about how you could improve for next year.
Check out our Six top financial tips for small business owners to help you with growing your business.
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