Welcome to our annual Small Business Matters editorial. After a very strange 18 months, small businesses are beginning to find their way in the new normal of a COVID world.
Some industries have managed well during this time, others have been hard hit. Regardless of what industry you are in, there are some things all business owners can do to be ready for the end of the Financial Year.
- Get paid
- Pay your bills
- Pay your staff super early
- Close off your POS system and stocktake
- Get ready for new payroll changes from 1 July
Get paid This may seem obvious, but there are many small businesses in Australia who are owed money, so now is a great time to check your Accounts Receivable and work out what invoices are outstanding.
You may need to send a reminder or a statement to your customer as a prompt to pay you, or in some circumstance, you may need to pick up the phone.
Make sure you have reconciled all payments received to date before undertaking this exercise. There is nothing worse than chasing money which has already been paid!
Pay your bills As you come into the end of the year, have a look at your Accounts Payable. If you have old bills sitting there not paid, now is a good time to pay them. If you are in a position to do so, you may want to pay any bills due in July early.
Not only will this maximise any deductions you have for the year, you will also reduce your liabilities going into the new year, and in some cases, may not have much outlay at all in July.
Pay your staff super early Just like paying your bills early, paying your staff super early will also help you maximise your deduction and reduce your liabilities going into the new financial year.
There is however a catch with super. To be a deduction the money must be received by the relevant funds by the 30 June. If you want to take advantage of this deduction, I recommend paying any staff super through your relevant clearing house by 20 June.
Banking Where possible, please bank any cash you have on hand on 30 June. In fact, don’t just do this at the end of the financial year, do this at the end of every quarter!
Close off your POS and Stocktake
Many small businesses use a point-of-sale system which integrates with their accounting software and whilst best practice would be to close off at the end of every day, some smaller businesses may only do this weekly.
If you are one of those smaller business, set up a reminder to close off on 30 June. This way your sales figures are up to date to enable your accountant and bookkeeper to produce accurate reports for future decision making as well as tax purposes.
Like your POS, if you don’t have a true picture of the stock you have on hand, you can’t produce accurate information about the health of your business.
If you hold stock of any sort, do a physical count to establish the value of the stock at close of business on 30 June. If you manage your stock through an inventory system, you can use the system to produce a report of the stock you should have one hand. This can then be used to assist your count.
New Payroll Changes from 1 July
There are also some payroll changes to be aware of for from 1st July.
First of all, wages paid to your staff from the beginning of the new financial year, will attract the new Superannuation Guarantee rate of 10%.
Secondly, Fair Work Commission recently announced a 2.5% pay increase which applies to most awards from 1 July. There are some exceptions to the commencement date, with Retail commencing from 1 September and other specified Awards from 1 November. Please check with Fair Work if you need clarification around your particular circumstances.
Well, I hope this has helped your business get EOFY ready. Remember the information here is general in nature. If you need information specific to your business, talk to your bookkeeper or accountant.
Written for the Clarence Valley Independent by Cathryn Hopson of Hands On Bookkeepers – Providing clarity around your finances giving you peace of mind so that you can focus on growing your business.