Preparing Your Business for End of Financial Year

The end of the 2022-23 Financial Year is nearly here, and there’s plenty to prepare as 30 June closes in. Proactive business owners always look to improve their business all year-round, but there are several key actions to undertake over the next few weeks to optimize your business’ position at tax time. Data file reviews, end of year payroll, transitioning to cloud-based software – all these and more can make a significant difference to profitability and efficiency, and set you on the path to long-term growth. Here are some important items to add to your to-do list before EOFY.

Data File Review

No matter the size or shape of your business, executing a data file review each year is recommended. There are a number of benefits for your business, but the key upsides of a pre-EOFY data file review are as follows:

  1. Accuracy of Data: Reviewing your internal financial data files, and cleansing where appropriate, helps to ensure integrity and accuracy. In the long term, this can help prevent errors and ensure your financial records are up to date.
  2. Legislative & Tax Compliance: The last thing you need (at any time of the year) is a penalty or fine from the ATO – reviewing your data files annually means you can be sure that your business is compliant with relevant legislation and regulations, even as laws change.
  3. Efficiency Improvements: Of all the things you can do to improve efficiency and streamline your internal processes, data file reviews are often overlooked. Imagine how much time and money you can save on potential issues if you review and cleanse your data files on an annual basis!

Forecasting & Business Planning

You probably don’t need us to tell you that a thorough business plan and forecasting can do wonders for your business. But you might be surprised at just how many businesses don’t have either in place! While executing these can take time, the investment is absolutely worth it – account for what you already know and factor in various scenarios to aid in the budget preparation process. Here’s what an annual forecast and budget can do for your business, and for you as a business owner:

  1. Define your Business’ Goals: Not only will business planning and forecasting help you define clear and achievable goals for your business, you’ll also be developing a roadmap to help you achieve them, as well as staying focused & adaptable.
  2. Identify Risks and Opportunities: Looking ahead with business planning and forecasting gives you the tools to identify potential risks and opportunities for your business. Armed with this knowledge, you can take proactive measures to mitigate risks and capitalise on opportunities.
  3. Improve Decision-Making: Business planning and forecasting gives you a clearer picture of your business’ financial and operational performance, allowing you to make better decisions about investments, spending, growth strategies, staffing, client services, and much more.
  4. Improve Resource Allocation: Thorough business forecasting gives you the data to more accurately predict future demand and allocate your business’ resources accordingly. That way you can capitalise on that demand when it comes, and use it as a platform for growth.
  5. Develop Your Financial Plan: The clear understanding of your business’ financial performance that forecasting and planning brings you will trickle down into your personal finance as well. Knowing how your business is likely to be performing in the future means you can more accurately develop your own budget, manage cash flow, and plan your own investments.
  6. Monitor Business Performance: As you work towards the goals you’ve set for your business, your business plan and forecasting gives you important insights into your progress. You then have the tools to adjust your approach or re-allocate resources as needed, ensuring your business stays on track.

Business Improvement Planning

Many industries are experiencing a shortage of eligible candidates to fill roles, and some businesses simply cannot find the right people to join their team. This has been a primary motivating factor for many business owners to look at ways to adopt improving technology and make their business’ operations more efficient, thus reducing their reliance on employing additional staff. When was the last time you considered what could be improved within your business? While businesses should conduct a thorough business improvement process every 3-5 years, if it’s been a while, the run-in to EOFY may be a timely opportunity for your business.

Here are some of the key items to keep in mind when reviewing your business improvement plan:

  1. Business Goals and Objectives: Start by reviewing your business’ goals and objectives. Check that they align to the overall vision and mission of your business, and are clear, measurable, and achievable. Not only do they need to be well-defined, but you should also check that they can be tracked and measured over time.
  2. KPIs/Performance Metrics: Review the key performance indicators (KPIs) that are being used to track progress towards your business’ goals and objectives, and how your team contributes to those. Is your team aware of their role in helping the business reach its goals? Are they accountable for making that happen with relevant and meaningful KPIs? Are there any gaps in the data that require attention?
  3. Action Plans: Do you have documented, appropriate action plans in place to achieve your business’ goals and objectives? Are they aligned with your business’ current resourcing, staffing and capabilities? Are there any gaps in the action plans that need to be addressed?
  4. Resource Allocation: Review the ways resources are allocated within your business and look for any instances where they aren’t being allocated appropriately. The allocation of resources should clearly support the achievement of your business’ goals and objectives, so this is the time to deal with any gaps.
  5. Risk Management: Different businesses and industries face different types of risk. Evaluate how risks are being managed within your business and ensure there are risk mitigation strategies in place to identify and assess them regularly. This is also a good opportunity to ensure your insurances are up to date.
  6. Stakeholder Engagement: Consider how stakeholders are being engaged in your business improvement process, including setting goals and objectives. Are they being kept informed of progress and results? Are there opportunities to increase stakeholder engagement?
  7. Implementation: Evaluate how well your business improvement plan is being implemented. Is the management and leadership team driving it from the front? Are they successfully engaging employees in the quest to achieve business goals? Identify any potential barriers to business improvement implementation and develop action items to address these in a timely manner.

2022-23 End of Financial Year: Key Items to Review

Consider the below a checklist of the key things to review in your business before 30 June arrives:

  1. For businesses employing staff and paying wages – are you Single Touch Payroll (STP) Phase 2 compliant? This includes instances where you have paid wages earlier in the year, but are no longer paying wages – there is still a requirement to register for STP Phase 2 and report and finalise employee payroll through an approved STP Phase 2 provider.
  2. STP Finalisation is due to be submitted to the ATO by Friday 14 July 2023.
  3. Are all of your business tax lodgements up to date? If you are behind on any ATO obligations, we strongly recommend you bring these up to date to ensure your business remains compliant.
  4. Super Guarantee increases to 11% effective the first payroll in July 2023. The majority of cloud-based STP software companies will automatically update this percentage, but it is still important to perform your own checks on this across all employees.
  5. Do you employ anyone on a Federal or State award? All applicable awards should be reviewed during June and July, as this is the time where any changes to rates typically occur (at the commencement of the new financial year). Any changes will need to be reflected in your payroll starting from the first pay cycle of the new financial year.
  6. Taxable Payment Annual Report (TPAR) requirements: You may be required to lodge a TPAR to the ATO no later than 28 August 2023 if your business is in any of the following industries: Building & Construction; Cleaning; Road Freight & Courier Services; Information Technology Services; or Security, Investigation or Surveillance Services. Most cloud-based software will facilitate the electronic lodgement of a TPAR, just be sure that you have the following details of all of the contractor payments made throughout the financial year:
  • Contractor’s Business Name
  • Business Address
  • Contractor’s ABN
  • Date of all payments
  • Details (Invoice number)
  • Amounts Paid (GST amount and total including GST). Where GST is not applicable the amount to be reported is $0.00.
  1. Payroll Tax: If your business payroll exceeds either the monthly threshold of $83,333 or the annual threshold of $1 million, you will need to register for payroll tax through Revenue online. If you require clarification on this (or any other similar obligations), please contact us to arrange a review.

Next Steps for your EOFY Preparations

We’re very close to the end of the 2022-23 Financial Year, so now is the time to act on the above. We understand that as a business owner, your list of things to do is probably ever-growing, particularly at this time of year, but rest assured the People + Partners team can take some of the burden off your shoulders. Even the most time-poor business owners can achieve success and growth in their business, so if you’re ready to make it happen then please don’t hesitate to contact us on +61 2 9093 1311 or contact us via our website.

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