EOFY 2014: avoid last-minute paperwork blues
If you’re a start-up or small business operator nervously counting down to the end of the financial year (EOFY), take action now to help you avoid last-minute paperwork blues writes Tim Reed.
If you spent the final hours of last June tackling piles of paperwork, reconciling receipts and clocking up rushed conversations with your accountant or bookkeeper – there’s a much better way to bring in the new financial year.
Managing a business can take up the majority of your waking hours. It’s tempting to delay the not so exciting aspects, such as bookkeeping, until crunch time. Lack of preparation is one of the key reasons why many business owners and their loved ones dread the end of financial year.
With a little forward planning, it’s possible to avoid the stress of negotiating piles of paperwork and usher in the new financial year with confidence and clarity.
Here are five EOFY paperwork mistakes that businesses frequently make that can cause eleventh-hour blues, and how to avoid them.
1. Not keeping detailed documentation A common mistake is being unprepared. If accounts and records aren’t reconciled and updated regularly throughout the year, this can make the end of financial year period much harder than it needs to be. Missing invoices and receipts can result in large gaps in reporting, as well as lost time spent tracking down misplaced paperwork.
Using reputable accounting software you organise and track your financials, build a clearer picture of your financial circumstances, and helps keep you compliant, too. A daily feed of bank transactions, which comes straight into MYOB’s accounting solutions means keeping up to date with your accounts now takes a lot less time than in days gone by.
Paperwork that’s well organised means fewer ongoing tax time tangles for you, your employees and your loved ones. It also frees up your time, so you can focus on growing your business and doing what you love.
2. Inadequate planning and monitoring of cash flow Businesses often fail to monitor incoming and outgoing cash flow within a set timeframe – such as a financial year or a quarter – and are left without vital funds to service their obligations. Generally, this is because they don’t have the data to monitor and track their ongoing, fixed and variable costs, and ad-hoc expenses. Before long, some businesses can find themselves starved for cash and facing serious financial difficulties.
Together with advice from your professional accountant and/or bookkeeper, accounting software can help you better understand your business and manage cash flow in real-time. It will track your expenses, payroll, inventory, estimate GST owed and more, so you can clearly see how your business is going at any time. And if you use a cloud solution such as MYOB Essentials, your system is always up-to-date with your business bank balances thanks to your transactions being automatically fed in from your bank.
3. Not keeping up with changes to tax compliance The end of financial year is also a time for businesses to prepare for the year ahead, which includes being aware of changes to tax compliance. The laws and regulations that apply to running a business change frequently so it’s important to ensure you’re up to date.
Staying up to date with compliance changes can give business operators a head start on the new financial year. An accounting solution acts like a virtual assistant by automating many aspects of your financial management and lets you view your financial situation in-depth or at a glance. Stay in touch with your accountant, bookkeeper or financial advisor too.
4. Relying on just a head-in-the-sand approach to accounting
Some business operators aren’t cut out for accounting. Regardless of automation, they’re better spending time working in and on the business than on the books. These businesses are best to work with a bookkeeper or accountant to get their books done for them. MYOB has a range of accredited partners available and ready to help. Many accountants can sign the business up for MYOB Essentials or MYOB BankLink, a service that sends the businesses bank transactions directly to the accountant, minimising the amount of paper records the business owner needs to provide.
5. Leaving tax paperwork until the last minute
Some businesses don’t take a long-term approach to their tax, leaving them unable to forecast or make accurate, informed decisions about their business. These limitations can impact a business for years to come.
Maintaining a close working relationship with your accountant, bookkeeper and/or financial planner, and using an accounting solution makes it easier to stay on top of tax and end-of-year financial requirements. Put away that shoebox, retire other time-consuming systems and start taking advantage of accounting software to streamline your processes, get better reporting and insights, and ensure you are compliant.
It’s never too early to get organised so you can spend less time on paperwork. It means less stress for you, your employees and your loved ones, and more time for growing the business and enjoying life outside work Visit http://myob.com.au/EOFY for a summary of major tax changes, helpful tips, resources and more.
Tim Reed is the chief executive officer of Australia’s largest business management solutions provider, MYOB. He develops and drives the business’ strategic development, including its expansion into online business management solutions.