End of financial year
Business Doctor Simon Hodgson on tackling end-of-financial-year tasks
It looms faster each year. The accountant has emailed you twice already suggesting a catch-up; the tax office was on the phone yesterday and your two-day-a-week accounts lady said she needed some time with you next week to put to bed “stuff” you’ve been avoiding for quite a while.
The end of the financial year can be a good time or it can be a headache but, really, it’s up to you how you handle it.
• Depending on your situation, consider deferring income if you are assessed on a cash basis. Or if you run your accounts on an accrual basis, defer the source of income.
• Ensure your superannuation entitlements are paid by June 30th to get the deduction (my accountant will be laughing his head off seeing me write this!!)
• Write off bad debts you know are unrecoverable by June 30th.
• If you are operating a personal services business, ensure you satisfy provisions with respect to personal services income, including the infamous 80/20 rule.
• You may be able to realise assessable losses by scrapping any obsolete plant and machinery in your workshop, providing you do it before June 30th.
• If you are able to, pre-pay company expenses you know are going to take place up to 12 months in advance.
• Pay your subcontractors ahead of time if you are able to; it will certainly make them sit up and take notice if you do!
• Be careful to check the details of any loans to shareholders. If they aren’t set up correctly the Tax Office may deem them as unfranked dividends paid to the shareholder.
• Stocktake. You know it has to happen, so plan ahead. Revalue trading stock at the lesser of cost, market value or replacement value.
• Review next year’s budget eight weeks before the end of the year, not eight weeks after it (or, as one business owner said to me yesterday, “not eight weeks after the end of next year”!)
• Ensure the correct staff are in place to handle the inevitable busy run through to Christmas.
• Be positive and optimistic about next year and embrace the opportunities ahead for you and your staff. Remember, an optimist is someone who goes fishing for Moby Dick in a rowboat and takes the tartar sauce with him!
• Above all, reply to that email from your accountant and sit with your accounts lady — they’re only trying to help!!
If there’s a subject that you would like an opinion on, or just some general advice, email me at s.hodgson@kbdi.org.au
Simon Hodgson is a Director of the Kitchen and Bathroom Designers Institute (KBDi) and runs Direct Representation, a consultancy business to the kitchen and bathroom industry.
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