While it can be tempting for business owners to sweep certain tasks under the rug over the financial year, like bookkeeping or organising tax receipts, scrambling to get everything sorted when June hits isn’t fun - it’s usually just extra stress!
Luckily enough, the new financial year is here, and with it an opportunity to make sure your business uses the next 12 months to get maximum benefit of any new tax break, change in regulation or business process that could benefit your bottom line in the 2019/2020 financial year.
To help you start off the new financial year on the right foot, here are three tasks you shouldn’t skip:
Task 1: Review last financial year’s finances
Looking over your business’ financial performance for the last year can be a really useful step in setting yourself up for more success this financial year and importantly, stop you from repeating the same mistakes. Whether you create a point-by-point list or an in-depth spreadsheet, collate all the info you need from your financial statements over the course of the previous financial year.
Doing this allows you to:
- See where you spent the most money (and where you didn’t)
- Pinpoint areas you can cut spending
- Calculate how much you pay in fees and interest across your business banking products
- Track cash flow (and project your cash flow for the next financial year)
Task 2: Do a banking audit
The start to the new financial year is the perfect time to do a banking audit and see whether you can get a better deal elsewhere.
The new banking code of practice has just come into effect which means that when applying for a business loan, banks will now need to give small businesses a reason if you’re declined, provide you with terms and conditions in ‘plain english’, and full details on what you need to submit and how long it will take to be approved.
And if you are going to be looking at getting a business loan this year, make sure you shop around. While the Big 4 banks remain the most popular option for businesses, research by our money experts earlier in the year found that challenger banks loans were on average 88 basis points cheaper. On a $250,000 over 5 years, you’d pay an extra $6,007 on your loan in interest and fees just for banking with one of the big four.
If you’re a business that makes regular overseas payments to suppliers, freelancers or even remote offices, Richard Freestone of money transfer provider OrbitRemit says switching from a regular bank to an international money transfer business specialist can be a big money saver for small businesses.
“Bank to bank transfers are often subject to uncompetitive and fluctuating exchange rates and high fees from both sides of the transfer,” he said.
“Bank transfer fees can be as much as $12 a transfer, so if you’re paying this multiple times a month it really adds up. Then add in a couple of cents difference in exchange rate each time and that’s a lot of your cash down the drain.”
By doing an audit of all your business banking products from bank accounts, loans through to your business credit card, you might be able to save money on fees, pay lower interest or even get a higher interest on savings if you’re starting the year off in the black.
Task 3: Take full advantage of available tax deductions and government schemes
Saving money on tax deductions is a huge benefit for businesses so it’s important to keep track and record purchases that may be deductible over the entire financial year. Use this new financial year start to identify exactly what can and can’t be deducted according to the ATO.
For instance, according to Officeworks and H&R Block, 84% of small businesses aren’t taking advantage of the instant asset write off government scheme, despite the instant asset write off threshold being raised from $20,000 to $30,000 as part of the 2019 Budget.
If your business has a turnover of up to $50 million, you may be able to claim tax deductions on things like:
- New desks
- New till
- Delivery van
Be sure to look into Government grants and assistance programs that might be available in your state or industry as you could be eligible for more than you’re currently claiming.
Need help finding a good deal on business banking products? Head over to our business banking hub or have a read of our useful guides.