As the year has now come to a close it is time to draw in a big breath and prepare our resolutions.
We’ve put together a list of 5 items that you should be looking at in your business to prepare for the next 12 months. We’ll flesh out each of them in the coming weeks.
Finalise your 30 June 20XX accounts as soon as possible in the new year.
By getting your accounts up to date early in the new year you will have a better understanding of how your business performed in 20XX and whether your margins are covering your overheads. It will also give you transparency of your cashflow and working capital situation (A simple way is to compare your Bank account and Accounts Receivable against your Accounts Payable). Don’t forget to reconcile your Depreciation, Interest and Superannuation as it will help with point 2 below.
Get an estimate on your tax payable and when it is due.
Knowing when your tax bill is payable (and how much it might be) you can plan for it and have the cashflow available to pay for it saving you time and money organising a payment arrangement with the ATO. For majority of small businesses your tax will be payable by 15 May 20XX however there are a number of other dates depending on your situation. The simplest way to work out how much tax there will be to pay (if you are in a company structure) is to multiply your net profit by 28% if you have less than $2M turnover. If you have greater than $2M turnover then multiply by 30%. If you are a sole trader you will need to compare against your marginal rate or if you operate from a trust it is best to speak to your accountant to get the best outcome from your distributions. Remember this is only an estimate and you need to refer to a registered tax agent for preparation and lodgement.
Review current processes for improvements.
Processes that aren’t reviewed and improved become tired and complacent over time. With the use of technology you can potentially create more hours in a day. Are there any processes that staff are manually completing that technology can do instead? I’m sure for many businesses owners they have come across good ideas for their business from webinars and training days that they just keep putting off. The best time to change processes is at the start of a new year or at the end of a reporting period (eg at the end of a quarter) as they won’t impact on what has already been completed.
Review your sales
If you want to increase your sales beyond what you have done in previous years there are a number of ways other than just raising prices. How can you get more customers? Is it an advertising stint on the radio or on social media or another way completely? What other services do you provide that you can up-sell to your current customers? How can you get your customers to come back more often? We will focus on this more over the coming months.
Review employee rates, remuneration and super.
What better time to give your employees a boost than at the start of a new year. Their taxable income has reset as has yours and if your budget allows it may be timely to review and increase wages where possible. If wholesale rate increases aren’t possible then other reward or incentive based options might be right for you. Make sure that your super for 20XX is ready to be paid by the due date if you haven’t already paid it prior to 30 June for a tax deduction. Increasing your super agreement with your employees is also a great way to increase benefits for your employees.