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12 tips for starting FY11/12 on the front foot

Wrapping up the EOFY properly ensures businesses roll into the new financial year smoothly, and helps business owners put their best foot forward from the get go. With this in mind, RSM Bird Cameron has put together 12 tips for starting the 2011/12 financial year.

1. Trading stock – physically count stock on hand at June 30. If this is not practical, ensure systems are in place to ascertain correct stock levels at year-end so your balance sheet is correct.  Incorrect or unexpectedly low (or high) stock levels can change the fundamental financial position of your company and impact cash flow, debt management or even the overall liquidity of your business. It can also uncover fraud, theft and inventory control systems, which may need to be upgraded or reviewed to reduce stock loss through damage or inadequate logistics.

2. Obsolete stock – identify any obsolete stock and write it down or off your books as a special rule.  It is unlikely that obsolete stock can ever be sold and it should not be reflected on your balance sheet as an asset as it will give you an inaccurate position of your financial position.

3. Bad debts – review debtors prior to June 30 to identify all bad debts. In order to write off a debt it must be bad, not merely doubtful. That means the business can demonstrate that it has tried all reasonable, practical measures to recover the monies owed to it and, in spite of that, it is unlikely that the debt will be repaid. A bad debt must have been previously included as assessable income.

4. Superannuation guarantee – ensure that superannuation obligations are paid and cleared prior to June 30 to obtain a deduction in the current financial year.

5. Additional superannuation – consider making additional superannuation contributions as an employer (subject to current limits) before June 30 to take advantage of concessional tax rates afforded to superannuation contributions.

6. Consumables/repairs – consider restocking consumables such as fuel, stationery, sprays and chemicals before June 30. Also undertake any necessary repairs before the end of the financial year to maximise taxable income and prepare yourself for the year ahead.

7. Staff bonuses and commissions – a tax deduction may be claimed for staff bonuses and commissions that are unpaid at June 30, provided they were ‘definitely committed’ to the expense prior to the date.

8. Accrued wageswages that have been accrued at June 30 but not made until after that date may be claimed as a tax deduction.

9. Defer income – look to defer income if possible until after June 30 to decrease taxable income while not impacting cash flow.

10. Prepayments – are available if the entity is permitted to prepay expenses under tax legislation i.e. SBE (Small Business Entity).

11. Prepaid interest on passive assets, such as commercial and residential properties – look to prepay interest prior to June 30.

12. Fixed assets – review last year’s depreciation schedule to determine if assets listed still exist. Identify missing items, any that have been scrapped or disposed, and any new ones that have been acquired. Update your depreciation schedule accordingly.

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Lorna Brett

Lorna Brett

Lorna was Dynamic Business’ Social Web Editor in 2011/12. She’s a social media obsessed journalist, who has a passion for small business. Outside the 9 to 5, you’re likely to find her trawling the web for online bargains, perfecting her amateur photography skills or enjoying one too many cappucinos. You can follow her on <a href="https://twitter.com/#!/dynamicbusiness">Twitter @DynamicBusiness</a>

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