04 Jul 2017
It’s a period when business owners are looking to make the most of what is a peak time of the commercial year and they’re likely reviewing business plans and profits against budgets as they look to sustain or improve results in the new financial year.
Then, of course, its endless meetings with accountants and tax advisers to keep-up with the annual tax return, quarterly business activity statements and seemingly countless reporting and compliance requirements…
While it’s not just part of the EOFY frenzy, understanding the latest legislative changes and tax incentives for small business is time consuming in its own right. ANZ research shows legislative change is a key challenge for 20 per cent of small businesses.
Cashflow is also hugely critical with 29 per cent of small businesses believing it to be a challenge. There is real value for business owners to spend time to consciously understand the business cash conversion cycle and identifying proactive tactics to improve it.
But the start of a new FY is a good point to regroup and re-set. By following a few simple steps business owners can get a head-start on the competition. Thomas Tulley, Partner and Leader for EY’s Private Client Services in Brisbane, provides his insights below.
" Running a business can be a little like owning a car - you can do the bare minimum to keep it on the road or you can stay a step ahead by lifting the lid on every part." Thomas Tulley, Partner and Leader for EY’s Private Client Services in Brisbane
• Mid-year health check
Running a business can be a little like owning a car, Tulley says. You can do the bare minimum to keep it on the road or you can stay a step ahead by lifting the lid on every part of the business to understand where efficiencies can be gained and where revenue opportunities can be maximised.
Doing that as part of a mid-year health-check can give business owners a running a start on a new financial year.
• Set tax and cashflow strategies early
According to the Australia Tax Office around 50 per cent of small businesses come under financial pressure within the first year and one of the biggest reasons is cashflow.
Dubbed the ‘oxygen’ of a business, there’s no disputing cashflow plays a huge part in how successful a business can be.
By reassessing their cashflow and tax strategy early, businesses not only have more control over their finances but have greater freedom to act quickly – which means seizing on growth opportunities competitors are missing. That can come by investing potential savings into new revenue-generating strategies.
• Bite-size approach to super
When it comes to managing finances, superannuation is one of the biggest sources of confusion for business owners and consumers alike. And, too often, discussions about potential superannuation contributions are happening on the eve of EOFY.
With changes to the annual concessional (pre-tax) contributions now in effect (at July 1), business owners should be thinking about the superannuation contribution they want to set aside for the financial year ahead, and provision for the appropriate amount either monthly or quarterly.
This will help make it manageable and achievable from a cashflow perspective, while ensuring you don’t miss the tax benefits which remain under the superannuation structure.
• Harnessing relevant data
A builder may be synonymous with a hammer, a retailer with a cash register and an IT specialist with a computer, but there are universal tools of the business trade every business owner can take advantage of.
One of the biggest advantages for a business is access to real-time information on their financial position.
Simple accounting software such as Xero or MYOB provides live information on tax payments and profitability. This proves helpful in understanding cashflow and, in turn, planning.
July is a good time to identify the levers which can turbo-boost business performance, particularly when it comes to understanding sales performance, cashflow, and the market environment in which a business is operating.
The use of data analytics software to track customer behaviour and insights can be a powerful tool in any SME’s armour. ANZ Business Insights is such a tool, offering free access to real-time data and online reports with information on sales patterns and trends, customer profiles and industry benchmarking.
• Get in early for tax write-offs
The Federal Government’s $A20,000 instant asset tax write-off scheme has been well-received by business owners with an annual turnover of up to $A10 million (previously $A2 million).
All too often however we hear stories of business operators scrambling to spend the allocation ahead of the June 30 deadline. Sometimes they miss the boat or a sizeable chunk of it.
Assessing a business’ capital needs early in a financial year and making that investment along the way – as part of a broader business plan – can save a lot of time and stress at year’s end, not to mention gaining full value from the instant tax write-off.
• Staying ahead of the game
Beyond July 1 there are several key dates business owners should be aware of if they’re to stay ahead of the competition.
The ATO has a small business information portal which provides important updates, tips and key dates to watch out for.
Businesses which employ fewer than 20 people account for roughly 45 per cent of private sector employment in the country and businesses with 20 to 200 employees account for about 25 per cent.
It’s therefore important for corporate partners to support the sector by helping businesses to start, run and grow. Getting the basics right is just as important as looking for new market opportunities.
Tania Motton, General Manager, Business Banking, ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
04 Jul 2017
03 Jul 2017
04 Jul 2017