A new financial year will start soon, and it’s time to get organised. While the financial year 2020-2021 was worth remembering because of its unique nature, the new financial year will have better development and opportunities.
This is an opportunity for better finances and better business decisions this year.
Here are eight innovative ways to get organised, build your business and grow financially stronger.
1. Check your profit and loss statements
After stepping into the new financial year, you need to get your profit and loss statements in order before you file your taxes. If you are just starting, you might not have a profit and loss statement, but keeping your books in order is essential. Learn how to create a P&L statement here.
This will exercise will help you understand where you spent your money and what could be curbed when you need to cut off the expenses. Reviewing your finances is a direct effect of having proper profit and loss statements in place.
2. Plan your budget
Your business won’t survive if you don’t have the budget for it. So, when you are planning out your year, allocate your budget for each of the items. If you are well-organised, you will be able to expand your business strategically. Having a financial framework also helps you get organised and achieve what you need.
However, remember that your budget is your work in progress. While it will not be perfect, you should have a rough estimate of how much you want to spend in a specific field.
3. Prepare for bad and good scenarios
Change is the only constant thing in life. So you must be prepared for change management, even in the financial domain. Think about the following what-if scenarios:
- What if you lose your clients and sales go down?
- How much buffer amount would you need to sustain your business?
- What would you do if the sales go up?
- Do you have enough team members to help you achieve what you need?
Once you keep an emergency budget allocation in mind, you will be better prepared for all these situations. While it might not be a complete solution to your crisis — be it good or bad — you will be better prepared to face the change yourself and not be worried.
4. Evaluate your balance sheet
When in a cash crunch, you need to see where you can cut off your cost to stay afloat.
The best way to know where you have extra expenses is to check your balance sheet. Your balance sheet is a ledger that helps you to understand where you are spending your money.
It also shows your return on investment and the tangible assets you have. In short, you can check the assets and liabilities in your balance sheet. If you are finding that you have unnecessary expenses or need to curb some costs, find out which ones you can curb from your balance sheet. You’ll find two balance sheet examples here.
5. Make use of tax breaks
As an Australian small business, there are some tax breaks that you can make use of, which will allow you to get organised and add more cash in your hands.
You can claim work-related expenses as a business expense.
Additionally, your SMSF contribution is also deductible. Consult a CPA for your tax filing, and you will be amazed at what you can save in terms of tax breaks. Read 14 valuable EOFY tax tips for more on tax breaks.
6. Hold on to your proofs of purchase
To claim your tax breaks, it’s important to get organised and have a paper trail ready. Be it receipts for travel or insurance fees, or even furniture for your office.
Make sure that you keep your business and personal accounts separate for proof of purchase. In case you have paid for some business expense from your personal account, just pay yourself the amount from your business account.
7. Claim the big expenses
While buying furniture or office equipment can be a tax write-off, more significant expenses like office renovations or paying off your home loans can offer you a higher tax concession. Charges like lawnmower expenses, agent fees, water bills and any maintenance fees you pay for your office property fall under this head.
8. Hire contractors
No matter where you are in your business, it’s useful to have people you can outsource certain tasks to.
If you get stuck in your business’s day-to-day operations, you are not going to be able to expand.
This is where independent contractors can help you get organised. However, when you are handing out tasks, make sure they understand what needs to be done.
Have a clear outline of the deliverables and what you want. Understanding your team’s culture, thoughts and how they work can go a long way to establish a common ground. If you find the right people for your business, you have won half the battle.
To establish a good relationship, ensure that you have:
- Induction training
- Process manuals
- Staff manuals
- Accounts up to date
This will help any new team members you hire to move swiftly into position and enable you to scale without worrying about your day-to-day operations.
Bonus tip: Don’t be late
While the due date for filing your returns is set in stone, getting your financial system in place isn’t.
This is why you need to ensure that you have systems and processes in place. Once you know how to do something, write that down. This will serve as training materials for your team and any contractors you hire. Plus, it’ll help you get organised.
Over time, you can modify the manuals and make them more streamlined. Having someone to show you the ropes can also help in creating a system. Depending on what you need, a business coach can help you with streamlining your process.
Get organised for the new financial year
In addition to planning your year — and updating your systems and processes — using the latest technology in your business can help you get organised better. For example, using a cloud-based accounting software or HR software would help you to streamline all your management tasks.
Additional efforts like accurate record-keeping, and meeting your tax obligations on time also account to a well-managed financial year.
This post should not be taken as legal or financial advice. If in doubt, always consult legal or financial professionals for help getting your business organised.