How to start the tax year right

You’ve made it through another financial year and you are ready to the year fresh. Being prepared and having a plan can make a difference to starting the new financial year on the right foot.

Often your finance and tax are the last thing you think about being proactive with, however, we understand how a proactive approach has major benefits for business owners (after all we named our business Proactive).

To ensure you start the financial year on the right foot, here is a simple checklist that you can follow. This will help you to set targets and stay on track to help make the most of your financial position, as an individual and as a business.

Set budgets for expenses – ongoing expenses are a fixed cost which means you can budget for them. Further to this, take into account other services of projects you want to undertake this financial year. This could include a new website, hiring a marketing consultant, hiring a new staff member, additional financial support… whatever it is, include it in your expenses budget so you can allow for it in your cashflow.

Set sales targets (if relevant) for your team – If you have a salesperson or team, having sales targets is a must. Even if you don’t you will have some idea of what you need to sell in order to cover your costs and make a profit. A good idea is to have a basic sales target but also have push targets with incentives to achieve them. A sales target needs to be an increase on the previous year’s sales.

Consider a price increase – the cost of living has increased on everything and it is usual for the price of service to increase. Even a CPI price increase of around 7% impacts your bottom line and your clients will likely be expecting an increase so consider a price increase to help offset your increased costs of doing business.

Review your accounting software – are you using the right software for your needs? If you have a simple structure you might not need expensive and complicated software like Xero. You need to consider the cost, what features you need, and how the software can help you with reporting and streamlining your numbers.

Set up processes – it might sound simple, but many businesses have no process in place for important tasks such as paying invoices or chasing overdue accounts. Having a documented process means that anyone can follow this to do the task and it is done the same way each time, to minimise errors.

Create a cash flow plan – cash is king and having a cash flow plan will ensure you don’t suffer from cash flow issues that can cripple your business. We can help you put a plan in place to manage the cash in and out of your business.

Review your Super – it is often easy to just file your super statements in a draw when they come, after all you cannot touch them for many years. However, you need to regularly review your super accounts to make sure it is still the right fit for you. Also changes in legislation from July 1 mean an increase in super payments of 10% so you want to ensure you are maximising the compound interest that comes from super. It is a vital part of your retirement plan.

Consider your business structure – consider your business structure and whether it gives you the best asset protection as well as the optimum tax opportunity. With sole traders and partnerships business assets are owned directly as are personal assets like your home. It is preferable to separate these from each other. Structures like companies and trusts can offer protection when things go wrong, as well as offering some tax benefits not available to sole traders and partnerships. Talk to us about this.

Get support & advice regularly – you are an expert at what you do and so are we. We live and breathe numbers all day and are up to date on the latest regulations and laws that you need to stay compliant with. Having regularly advice and support saves you money and can stop you making costly mistakes that can seriously impact your business growth. It is an investment in your business and the bonus is, that it is also tax deductible.

Don’t leave it months to set yourself up for success. If you do just one of these tasks a week you can start the new year right and set yourself up for a bumper financial year. If you would like help, then just click and make a time to chat to us HERE