End of Financial Year is slowly creeping up on us. Below are 8 simple things that you may not have already thought of that may ease your processes.
1. Forecast your Profits
If you are in the running to make a profit this Financial Year, be sure to plan well in advance to make and purchases that could potentially reduce your tax liability. Speak to your accountant about write-offs, rebates and deductions.
2. Plan for your stocktake
Many businesses avoid the annual stocktake because of the hassle involved. The stocktake is incredibly important, as verification that your accounting system is operating correctly. It is as important as reconciling your bank accounts. If your system shows inventory of $1mil, and the actual stock count is $800000, you have some investigating to do. What looks like a profit in your accounts may suddenly turn into a loss (or vice-versa), as you adjust your cost of goods account.
3. Make a backup of your system before rolling the month / year, and take a second backup immediately after rolling.
This gives you a “recovery point”. It also gives you the ability to print out reports at a point in time. So, for example, when your accountant asks you in December for a stock valuation report as at 30th June, you would be able to do this from your backup if necessary. Retrospective stock valuation reports are usually inaccurate. The backup copy should also be provided to your accountant, to complete your tax returns. This is also a good test to make sure the backup actually contains data, and is readable.
4. Consider using a thirteenth period to make adjustments, and then lock the year.
Period based accounting systems allow you to run 13 periods instead of 12 monthly periods. This means you can do all your adjustments in period 13, and so not affect your comparative numbers. Otherwise, you may look like you made a huge loss in June, when in fact it was due to the annual depreciation journal. Once your accounts have been finalised and your tax returns completed, lock the year so no transactions from the current year can be backdated. It is difficult to change a system from
5. Print Reports.
It’s a good idea to create a folder on your file server called something like “2013/14 Financial Reports”. Most systems have a built in PDF writer, so instead of printing your reports to paper, be kind to the environment and print to PDF. Save your suit eof printed reports in the folder. This will save you hours over the next year or two, when you are asked by your financial institutions for copies of Profit and Loss statements and Balance Sheets. Simply attach to an e-mail and send them off when required.
6. Pay your super obligations by 30th June.
Even if the due date is July, you won’t be able to claim this unless it has actually been paid.
7. Review your Chart of Accounts
If you are going to make any changes to your Chart of Accounts, the end of financial year is a good time to do it. Speak to your ERP implementation partner to discuss the implications on comparative reports, such as “this Year / Last Year”.
8. Review your business processes
This is the ideal time to review your business processes, and indeed to look at replacing your ERP system if you have been thinking about it for a few years. It is always easier to start with a set of accounts that has been reconciled. Don’t go through another year with your old system if you can improve efficiency with a new one. You will be surprised at the rate of development in new software, and how much it can help your business grow.