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20 New Year’s financial resolutions

Feeling uneasy about where your business is at financially as the New Year approaches? It’s that time of year again: the last 12 months of dodgy financial decisions come to a head as the Christmas bills start to roll in and the January expenses make their mark on the horizon.

FBT Christmas PartyMost business owners have a strong resolve to do better at this time of year, but no idea where to start. Luckily, one of Australia’s leading Chartered Accountancy firms, Nexia Court & Co, has a list of 20 Financial New Years Resolutions to make life easier in 2011.

1. Meet your superannuation obligations on time.

In order to get a tax deduction for your superannuation it must be paid on time.  This means the withdrawal must clear your bank account ON OR BEFORE the 28th day of the month following the end of a quarter.  Failure to pay on time, means not only do you not get a tax deduction for that expense, you are also required to lodge a superannuation guarantee form with the ATO and pay a penalty based on the number of employees affected and how late the payment was.  This can be a time consuming and expensive process and is so easily avoided.

2. Invest in Praemium.

Praemium links your stockbroker with your accountant.  Online access will help keep a track of your investments, and help your accountant to help you to plan for tax liabilities arising from capital gains generated. It will also reduce your accounting fees by making your capital gains tax calculations simpler as your investment history is easily accessible and  all in one location.

3. Send your accountant the purchase details of any investments sold.

Capital Gains (your profits), such as those derived from the sale of shares and property are subject to Capital Gains Tax.  The taxable value of your capital gain is calculated as the difference between the sale proceeds and the purchase cost.  If you can’t prove the purchase cost then you could be liable to pay tax on the whole value of the proceeds generated by the sale of your investment.

4. Make sure your stocktake is done before the end of the year.

If your business requires you to maintain stock then you need to undertake a stocktake each tax year to calculate the profit made through your business activities.

5. Seek advice from your accountant before you act.

Ask for tax advice before undertaking any significant changes to your business or investment structure. Mistakes can be costly.

6. Let your accountant know if you can’t meet your tax obligations on time.

It may be easier to get an extension to lodge and/or pay than it is to get a remission of interest or fines.

7. Talk to your accountant about your bookkeeper.

Discuss the quality of your bookkeeper’s work. You may be paying for unnecessary costs.

8. Do an MYOB course.

MYOB and Quickbooks and similar programs contain many traps for inexperienced and unwary users.  A course can help you to understand how to use the product more effectively and also more efficiently which will save you time and result in better records.

9. Ditch the shoebox.

Talk to your accountant about an appropriate record keeping system.

10. Process your transactions regularly.

Don’t leave it until the end of the year when you have forgotten what the transactions are for.

11. Reconcile your bank account at June 30.

If your bank statement concludes just after month end, try to undertake a mid-statement reconciliation as at 30 June.  This will save your accountant time because they won’t have to recompute the 30 June reconciliation report and in turn that will save you money.

12. Lock your MYOB file once you send it to your accountant. DO NOT make further changes!

This will force you to date invoices in the next period and prevent you from making changes to the year your accountant is working on. In the long run, it will mean that all your transactions are captured AND no costly time spent by your accountant identifying reconciliation differences next year.

13. Organise your receipts either alphabetically or by type.

Organised receipts will save your accountant time and you money.

14. Tape small receipts onto a sheet of A4 paper.

This will ensure they don’t get lost.

15. Scan and email your tax information

The chances are your accountant has already gone paperless. This means they would be scanning all your original documentation and preparing your work papers electronically.  Save yourself some money on postage and accounting fees by emailing your tax information including receipts to your accountant.

16. Check your documents are in the correct financial year.

Sounds simple, but all too often clients send in documentation that relates to a preceding (or future) financial year, resulting in extra time (and associated costs) incurred to sort through and identify the relevant from the irrelevant information.

17. Read all correspondence from your accountant.

It is being sent for a reason.

18. Vow to respond to your accountant within 24 hours.

Efficiency is the key ~ a quick turnaround increases your accountant’s efficiency and increased efficiency will minimise your fee.

19. Entities – Be aware of your Payroll tax Obligations

Entities and groups with payroll (wages + super + fbt) of more than $658,000 are liable for payroll tax in NSW.  If your business’s base gross wage is approaching $550,000 payroll, talk to your accountant about registration and reporting requirements so that together we can ensure you don’t get caught short.

20. Vow to send information to your accountant as soon as possible.

This means an earlier refund or better planning for tax liabilities that may become due.

Ian Stone is the Managing Partner of Business Services for Nexia Court & Co. For information on the services Nexia Court and Co can provide, please visit their website.