Our good friends at Astute Administration Services have provided us with 7 Tips to Guide You Through the End of Financial Year. Managing Director, Soonah and the team at Astute Administration Services (bookkeeping specialists) aim “to empower business owners around their finances by removing confusion, doubt and anxiety and replacing it with clarity, direction and focus.”
Soonah advises that one thing that is inevitable, regardless of your business or industry, is that the year-end finances can be a daunting, and sometimes unfathomable task. By keeping the below simple steps in mind and doing the leg work throughout the year, this task will become one of ease and simplicity and, most importantly, your accountant will be thanking you!
- Record All Transactions
This is the first, important step to ensuring that your bookkeeping is accurate. All transactions throughout the year, up to the year-end date, should be recorded. This includes current year bills and invoices, even if they have yet to be paid.
By reviewing your supporting documents (receipts, bills, invoices etc.), you are able to make sure that you’ve recorded everything. We use cloud-based software Light Year to digitally store all supporting documents, which means that this process pretty much completes itself throughout the year!
2. Reconcile Your Bank Accounts
Now that you have recorded all of your transactions for the year, the next important step is to make sure they match what is on your bank and credit card statements. This is done by reconciling your bank accounts.
By using bookkeeping software such as QuickBooks Online or Xero, this process is made easier and more efficient. By linking your bank accounts to the bookkeeping software, you are given direct access to the bank transactions that require reconciling makes completing bank recs much easier.
3. Review Your Financial Statements
You have completed the bookkeeping for your business. Now is a great opportunity to review your income statements and balance sheets, checking that everything appears to be correct. Take the time to go through each item. This is important and any minor mistakes, such as dollar amounts that don’t make sense, can be corrected before you send your books to your accountant.
Things to keep an eye for are:
- Account balances in the negative
- Balances that appear to be too low or too high
- Major discrepancies in balances from the previous year.
4. Receivables and Invoices
Receivables should be tracked on a regular basis to ensure your business is getting paid on time and the correct amount.
The best way to do this in preparation for year-end is to run an Aged Receivables report in your bookkeeping software. By doing this at your year-end date, you will be able to review a list of outstanding invoices and confirm whether or not they have been paid.
This means you will be able to address any errors or issues that pop up. Any items that don’t appear correct can be investigated and, if you think some invoices are missing, you can address them directly. At this stage you may also wish to contact your clients about any outstanding invoices.
5. Check Your Accounts Payable
Following on for your receivables, you will also want to ensure that your accounts payable are up to date and correct at the end of the year. As with receivables, you can run an aged payables report through your bookkeeping somewhere. Take the time to go through each item to make sure they are correct and accountant for.
Make a note of any missing bills dated on or before your year-end and make sure you pay anything that is outstanding.
By making sure all appropriate expenses are noted will help you to reduce your end of year tax bill.
6. Count Your Inventory
If your business has any kind of inventory, it is of the utmost importance to know its value come year-end. This is done by doing a stocktake of all inventory as close to the end of the year as possible. Whether it\’s cotton balls, car stereos or vitamins, all stock is to be counted and a value applied by multiplying stock on hand by unit value. Sometimes estimation is required but getting as close as possible is important.
7. Reflect on Your Year
Now is a great opportunity to take a step back and reflect on your business as a whole. How are you feeling about the direction it is going? Were there any changes you wanted to make? Is your vision for your business aligning with the bigger picture?
Taking the time to reflect on how your business operates will allow you the opportunity to improve on how it is running.
Here at Astute, we support business owners through this daunting and sometimes stressful time of year. We also like to help clients with cash flows and budgets to help stimulate growth!
To book in a free 15 minute consultation and discuss how Astute can assist your business, do not hesitate to reach out to us.
Astute Administrative Services
1300 236 597
Integrated Human Resourcing is an outsourced HR firm based in Burleigh Heads, Gold Coast.
If you would like to know more, call us 5613 1846 / info@humanresourcing.com.au