We’ve all used end of financial year checklists to make sure our business has maximised its position based on the years’ accounts. However, sometimes it pays to think outside the box!
With June 30 fast approaching, it’s time to find out how we can make the best use of EOFY 2017 to our business’ advantage.
Here are some bigger picture actions you can implement to put your business into a better position moving into the new financial year and future.
EOFY Tip #1 – Change your Payroll System
1st July is a great time to start or change a payroll system. The Australian payroll year is in line with its financial year, so it makes sense to have your payroll in alignment.
Starting a new payroll system
If your business has grown from just you as the owner making director’s drawings, to a business that now, or soon will have multiple employees, this is the ideal time to start using a payroll system.
Outgrown your existing payroll system
If your existing payroll system is struggling to cope with new employees, new PAYG rates, superannuation contributions, or the reporting information you need – get ready with new payroll software.
There are many payroll systems available, all offering a multitude of features. Some are stand-alone packages, others, such as Xero, MYOB, Quickbooks, Sage and SAP, are already integrated with your accounting software.
Look for software that is easy to use, can grow with your business, and has reporting functions so you can keep an eye out on your payroll obligations and cash flow.
Most of these payroll systems once setup is easy to use, and help control the intricacies of payroll and their associated responsibilities.
Outsourcing your payroll
An alternative to choosing and setting up your own software is to outsource your payroll to your accountant.
Commonly, your accountant will have the software and processes already set up to manage and comply with all PAYG and payroll tax obligations, superannuation payments, leave management and HR issues.
This can help you maintain payroll confidentiality, which can get a bit tricky especially with small businesses, and reduces the risk of fraud by providing separation of duties.
EOFY Tip #2 – Change your Accounting System
Have you outgrown or need to look for a new accounting package? Excel not quite cutting it anymore? Time to look for a new accounting software!
There is no hard and fast rule when to change accounting packages. However, in line with the payroll year mentioned above, the start of the new tax year is an easy changeover period to help you manage and saves time having to go between two systems.
The previous financial year can be finalised on the old software and the new year can be started in the new software. Your accountant can help set up the new software with opening balances and account creation or any of the software companies offer this as a service as well.
Ask your accountant and your business colleagues which accounting software they use and can recommend. It can get very confusing with the availability of a wide choice in the marketplace.
Penguin Management is a Xero Accounting Silver Partner, and we highly recommend it for many SME’s and growing businesses.
Ensure you arrange training on the software too, so you can get the best information and functionality from it, and your business can thrive with you in control.
EOFY Tip #3 – Purchase New Assets
First introduced in 2015, the Australian government recently announced it was extending the $20,000 Small Business Tax Break by a further 12 months through to June 30 2018.
The tax break allows any asset valued at under $20,000 to be instantly deducted from your 2017 tax return.
This makes purchasing new equipment before June 30, 2017, a very practical option, not least because the 12-month extension has yet to be passed by parliament, meaning the tax break reduces to its original $1000 after this date.
Such a deduction could also reduce your company’s tax liability, so have a look at equipment that could make your business more efficient or give you a competitive advantage. Do you have software, printers or computer equipment that need upgrading?
Does the warehouse need a new forklift or another truck to add to the fleet, that will speed up dispatch or widen your customer base?
Don’t go crazy with the company credit card, and purchase an asset for the sake of it, though! Check your cash flow and the viability of the asset purchase on your business. Again, consult with your accountant if you are unsure or need a second opinion.
Be sure to note the details of any asset purchases, including date of purchase, purchase price, and details of the asset, including its use and warranty. Your accountant or ATO may want to see this paperwork.
If you have any queries as to what is an asset purchase as classified by the ATO, talk to your accountant. Alternatively, read the ATO’s own information page about the deduction.
EOFY Tips #4 – Hire a New Full Time Employee
If you’re in lucky enough to be in New South Wales and thinking of employing new staff, now is the time.
The NSW Government maintains the Small Business Grant, specifically created to encourage small businesses in the state to hire new employees and expand their business.
When revenue is above target and likely to remain there, or when there is a positive trend in your growth curve, recruiting new staff can help your business expand and take advantage of opportunities in your current, or related industry.
To qualify, your business must have an ABN; and also have no payroll tax liability for the 12 month employment period of a new person, as at 30 June of the financial year. The employee must also be retained for 12 months in their new role.
A new job is created if the number of your full-time equivalent (FTE) employees increases, and that FTE is maintained over a 12 month period from the creation of the new position. The employment must commence on or after 1 July 2015 and before 1 July 2019.
For full-time employees, the grant amount is $2,000. The grant is a one-off payment per new position and is paid when a claim is made on the 12 month anniversary of when the position was created. However, you must register the employment of a person in a new position before the position is filled.
End of the financial year can be a taxing time for businesses. So have a chat to the friendly team at Penguin Management Services, our wealth of knowledge can really help you make informed and educated financial decisions.
Contact us by filling out the form on this page, or calling 02 8298 5308 and we’ll be happy to guide you in the right direction!