Seven top tips to close off the financial year
The end of the financial year can be an exhausting and stressful time for small businesses.
Start this new financial year by utilising automation to stay on top of your bookwork. Take photos of receipts and send them to Xero, create invoices on your mobile, complete bank reconciliation daily and form habits to keep you up to date and in control.
Often you are so focused on the day-to-day running of your business, the less exciting aspects, like bookkeeping, can be swept to one side. As the calendar ticks over towards March 31 there can be a lot of pressure.
Throw in the complications of Covid-19 and preparing for the EOFY has become an increasingly complicated process for SMEs. Business owners will have to account for changes brought about by a year marked by lockdowns, uneven cash flow and general economic uncertainty, but it doesn’t have to be that way. By investing in good accounting software like Xero, SME owners can take control of the process and keep their focus on the business.
Catch up on paperwork
Technology can help get your paperwork up to date, catalogued and, crucially, in the same place. Software like Hubdoc allows you to import all your financial documents (receipts, emails) and magically extracts the data to Xero. All the documents are then stored online, and you can search and access bills and receipts from anywhere.
Look to the cloud
Make your accountant’s job easier by using a cloud-based accounting platform, which will help you (and them) complete your year-end accounts and tax returns quickly and simply. Xero has tools for managing invoicing, bank reconciliation, simple inventory, purchasing and bookkeeping, making it a popular choice for SMEs wanting a painless end to the financial year. Much of it is automated, so it’s like having a virtual employee who does a lot of the work for you.
Know your worth
Manage your deductions by figuring out what you can claim. Have a chat with your accountant about how you treat any money you have received from government subsidies and understand what the Government is providing in terms of Covid-19 relief, if there are any changes to levels. Record personal expenses and business expenses separately, so that you don’t lose sight of small business costs paid in cash or with a personal card, because they add up. Start the new financial year with separate credit or debit cards – one for your business and one for your personal expenses.
Goodbye bad debt
If you are still chasing invoices from the financial year it may be worth writing them off as a bad debt. Think about whether your accounting software can take the hassle out of chasing payments by sending online invoices or automated reminders, so you get paid on time. Alternatively, consider offering the client a small discount if they pay before the deadline to close the books.
Write it down
Know the key dates on the financial year calendar and don’t leave anything to the last minute. Get familiar with important dates for the upcoming tax year and set reminders in the diary in order to avoid costly penalties for missing deadlines and late payments. Those penalties can really sting – and take a bite of your profits for the new financial year.
Ask an expert
Talk to an expert. Getting some time to speak to an accountant or bookkeeper can make a big difference and they can offer invaluable guidance on write-offs, rebates and potential deductions. Yes, it’s hard for businesses to plan for a whole year ahead in the age of Covid, but talking to an expert and setting up some simple goals can really help.
Get a plan
Set next year’s game plan because once you’ve got all your up-to-date information your accountant is in a good position to help you budget and talk about your taxes. They can also help put a strategy in place for the new financial year and forecast for different scenarios.
SOURCE: CONTENT BY XERO 25 Mar 2021
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.