As we approach the end of the financial year, there are a few things that are important to keep in mind, no matter how the last 12 months have been for you.
As an accountant working with small businesses, I have a couple of things I want to mention before the end of the financial year, which is now only weeks away.
Firstly, the basics. If you haven’t done so already, now is the time to have a look at your profit and loss, review your expenses and figure out if there are any accounts you can pay in advance (not just for the sake of a tax deduction) in order to reduce your tax bill. Don’t forget to pay employee super so it is recorded for the quarter.
Next, there are a couple of things I’d love you to keep in mind as a business owner:
Staying compliant
Lots of new businesses spring up around the financial new year and I am often called on to help establish trusts and new companies.
The big reminder I want to share is to be aware of the responsibilities and duties of a Director, be it of a trading company or of a trustee company.
As LegalVision shares, Directors have “legal duties to promote good governance of company affairs and to ensure that they act in the company’s best interests rather than their own.” These duties relate to ethical practices such as avoiding conflict of interest, ensuring accurate record keeping and following good fiscal management practices.
Even things like not updating your corporate address can get you into trouble as a Director. Or, for example, if you’re keeping records with the help of a basic excel spreadsheet rather than using bookkeeping software, you might end up in hot water - often a spreadsheet
Lately, the ATO is cracking down hard on company directors who are using their employee’s superannuation or the tax office as ‘lenders’ and failing to fulfil their financial obligations in these areas. As recently reported in Accounting Times, it’s things like tax debt that are pushing a growing number of Australian businesses into voluntary administration. If you are running behind on your tax or your team’s superannuation payments, it will be difficult to fly under the radar. In a way, this is a good thing because being prompted to take control of tax debt will prevent you from slipping further into the red.
The ATO has the power to issue Director Penalty Notices, which can make the Director personally liable for certain tax debts. It has been sending out thousands of these to hold company directors accountable for upholding their legal responsibilities, with an estimated 30,000 issued to directors in the first half of 2024 alone.
Action steps for the financial new year
With the financial new year set to start, now is the time to review your previous year’s performance, look at your forecast vs actual outcomes, have a bit of a reset and think about some goals for the next 12 months.
You might resolve to find an accountability buddy who is in a similar position or industry as you who you can share your goals with and check in to discuss your progress. This can make a big difference to the sense of isolation that business owners often experience.
Something else that is important to talk about at this point in time is that many business owners are finding things more challenging than ever in 2024. While some of my clients have had a profitable year, many businesses are experiencing disappointing financial results because of the high interest rates and the cost of living increases that are being felt at all levels.
If this is you, while your accountant can’t wave a magic wand and make every problem go away, having a conversation can make a big difference.
The first step is to acknowledge that there is a problem, which can often be a huge relief in itself. From there, your accountant can help you find solutions; either by identifying how cost-cutting measures can be achieved, looking into whether competitors are charging more, how a loan could potentially be restructured, etc.
So many business owners tough things out by themselves, only utilising their accountants for bare minimum services rather than asking their biggest questions and getting the reassurance that they have someone on their side to keep the business moving.
The sooner you speak to an accountant if your business is experiencing financial difficulties, the sooner a solution can be identified and implemented. We’re here to help and we have a vast network of colleagues and peers who we can reach out to as well.
Start with a conversation
You don’t have to keep the financial stress of owning a business to yourself. Whether you’re having your best year or your worst, your accountant is an excellent source of ideas and support to help you stay on the best track.
Contact JVP Advisory to set your financial new year resolutions today.