Day-to-day operations are already demanding enough for planning business owners, so it’s tempting to leave the dull stuff until crunch time.
MYOB CEO Tim Reed says that being unprepared is one of the key reasons why managers, and their loved ones, dread the end of financial year.
“It’s never too early to get organised so you spend less time on paperwork mid-year. It means less stress for you, your employees and your loved ones, and more time to focus on what matters most. If you spent the final weeks last year tackling shoeboxes of receipts and buried in paperwork, here’s a must-have guide.”
Ten steps from MYOB to help planning firms avoid the last-minute dash:
1. Don’t wait for June, record transactions regularly
Record all financial year transactions as you go and ensure that’s done prior to 30 June; this includes all sales, purchases, payment and receipts. It may sound obvious, but logging your transactions can be very time-consuming if left until June or July. Maintaining and updating records regularly will alleviate the pressure. If you’re not quite there yet, perhaps block out time in your diary for recording each week or fortnight.
2. Create a separate copy and back it up
Whether you’re working on your accounts in the cloud or on your desktop, you need to make a point-in-time backup outside your accounting system that creates a data file for the 2012/2013 financial year only. Carefully save and store your 2012/2013 financial year file elsewhere in the cloud or offline. This will help streamline the transition from June to July and ensure the file is easily accessible in future.
3. Get ready to stocktake
If you have inventory, you need to complete a stocktake on or just prior to 30 June. A stocktake will allow you to write-off any obsolete stock and investigate any theft or shrinkage.
4. Reconcile your bank accounts
If you’re using an online accounting solution, you’re enjoying the benefits of having your bank transactions fed directly into your data file and auto-coded – a significant time saver. If not, reconcile your bank accounts after receiving the final bank statement of the financial year to ensure your records match the record of your bank(s).
5. Reconcile your accounts receivable and accounts payable
All accounts receivable need to be reconciled. The value of open invoices must always match the balance of your receivables. Make sure you clear all bad debts and credit notes and double-check all outstanding arrears. If any debts have been outstanding for more than 12 months and/or are considered non-recoverable, you may be able to claim a GST credit and write them off as an expense. Reconciling your accounts payable is a similar process, where you need to finalise outstanding payments, debit notes and the recording of all cash payments. The value of your open purchases must always match the balance of your tracking payables account.
6. Take advantage of deductions, write-offs and rebates before June 30
Contact your accountant to discuss the deductions, write-offs and rebates available to your business. Take action to scrap worthless stock, plant and equipment before June 30 by reviewing your asset register (which keeps track of your company equipment including items purchased, sold or disposed of). Remember, the small business instant asset write-off has increased to $6,500 to help you equip yourself with what you need.
7. Review accounts and reports
If the previous steps have been completed correctly then reviewing your accounts and reports should be a simple matter of ensuring everything matches up and you have the required supporting documentation. Ensure your BAS and superannuation guarantee charge statements are lodged and paid by July 28, and be sure to pay your super guarantee contributions for the fourth quarter of 2012 by 28 July 2013. If you miss this deadline, you must submit a Superannuation Guarantee charge statement to the ATO.
8. Provide information to your accountant or bookkeeper
Once the previous steps are completed, provide all necessary financial information to your accountant or bookkeeper. There are several options; for example, have them make a point-in-time copy from your data file in the cloud or provide them with a secure copy of your backed up files. Check what best suits them.
9. Final end of year adjustments
Your accountant or bookkeeper may want to make a number of adjustments to your reports or accounts. Once changes have been updated, lock all accounts relating to that year so that data remains accurate. This will help ensure an easy transition into the new financial year.
10. Prepare for the new financial year
The end of financial year shouldn’t be all reports and numbers. It’s also a good time to reassess and tweak your business plan and ensure you’re on the right path for next financial year. Familiarise yourself with regulation and law changes and implement these business changes before the start of the new financial year. It’s also a good idea to review your accounting software and update it if it means your business will remain compliant.