Money Matters: Nailing Your Year-End Finances

End-of-year financial year often equals chaos and overwhelm and as we approach that business milestone for another year here in Australia, we're sharing how to manage it without the headache. 

In this episode, Justine delivers practical and actionable advice to help you navigate EOFY without the drama and set yourself up for success in the new financial year. 

It's a must listen for anyone about to tackle EOFY without the headache.

Transcript

Speaker 1 0:35

You're listening to the Secrets of Successful Business podcast, your go-to source for business tips, tricks and proven strategies that will help you create a streamlined and profitable business. We chat to the best minds in business about their journey. It's my business and I'll do it my way, how they started, rather than going harder to get more focus on growing more with what you have. What they learned along the way. How long are you going to give this?

Speaker 2 1:03

What compromises are you going to make? Just because you can do it doesn't mean that you should do it.

Speaker 1 1:08

It's really important to remember that it's a long game and, of course, we'll ask them for their secret sauce for creating a successful business. If you're not failing, you're not doing it right. You should be struggling at times. That is part of the journey. Join us as we take a sneak peek behind the curtain, talk solutions for those business pain points, working smarter, not harder, mindset and the challenges of fitting it all in with the demands of today's busy lifestyle. If you're a business owner, side hustler or just starting your business journey, this podcast is for you. Now here's your host, business coach and content creator, justine McLean from Flossie Creative.

Speaker 2 1:48

Hello and thanks for joining me on the podcast today. In case we haven't met, I'm Justine, a small business owner on a mission to uncover and share the secrets of creating and running a profitable, sustainable and successful business. I've been in business for over 20 years now and I get to use all that I've learned along the way to help other women in business reduce the overwhelm, gain visibility around their numbers, charge what they're worth and make more money. It's about designing a life you love that fits into your definition of success. So if I can help you create the profitable business you deserve, please reach out Now without further ado. Let's dive into today's episode. Hello and welcome to the podcast.

Speaker 2 2:40

Well, the end of financial year it's one of those times of year in business and probably for a lot of people too who have jobs where there are shivers heading down your spine, maybe something that you're not looking forward to because it just seems really overwhelming. And certainly I know a lot of people who feel exactly that way about the end of financial year. But I am all about nailing your year end finances through just a few simple hacks, and in this episode today, I want to share those with you. So end of financial year here in Australia is the 30th of June, but this episode, you know, earmark it for the closer to the end of your financial year. It will be the same no matter what part of the world that you are in. So the part of the reason that people dislike end of financial year so much is because we're submitted or subjected to a whole bunch of advertising telling us what we should do, what we shouldn't do. We're told that we need to collect all these things so that we've got everything in one place and we can get our tax returns in really quickly and hopefully we'll get a refund. But a lot of people look at this time of year with absolute trepidation and worry and it's almost like they become paralyzed about putting in their return because the concern is that maybe they have really stuffed something up throughout the year and that they're going to be hit with a tax bill that they weren't expecting, that they can't afford, and for that reason a lot of people will put their head in the sand and completely avoid anything to do with the financial year. And honestly, I have so many stories from accountants and from former clients who, when they first came to me, would be like oh, taxes. Yeah, no, I haven't put those in for a year, two years, or you know. I just got it to my accountant it's only seven months late.

Speaker 2 4:36

So I think the first thing to do is just set that overwhelm aside because, honestly, the end of financial year is nothing to worry about if you are organized and one of the best ways to get organized as a business owner, in my opinion, is to use cloud accounting software. So if you've got a system in place fantastic. Make sure that you have spoken to someone who knows how to use it and that you've got a system in place, fantastic. Make sure that you have spoken to someone who knows how to use it and that you've got all of the shortcuts and the time-saving features absolutely nailed, that you know how to use all of them, particularly if you're reconciling yourself and if you are outsourcing your bookkeeping and that person is looking after your cloud accounting system for you. So that's Xero, myob, quicken, those sorts of things. Make sure you have a chat with them. We're about a month out now from end of financial year, so now's a great time to have a chat with them, just to make sure that they've got it under control. The I's are dotted, the T's are crossed. It's all good.

Speaker 2 5:37

If you are someone who's been using spreadsheets and that you know for your business and keeping tabs on your finances that way, you might like to think about setting up cloud accounting software for the new financial year to start on 1 July, because I promise you, even though it is a business expense, it will make your life so much easier. I just put a client onto Xero about a month ago. Now she's all set up, she's ready and raring to go and cannot believe how much time it's already saved her Just those spreadsheets that she had to sit down and fill in. So really important to get that system under control. I think, apart from helping to deal with all of those day-to-day finances, cloud accounting systems are great for processing payroll and dumping bills into and, because they're automated, they're definitely going to save you time. So have a think about that. If you have a look around, compare some of the cloud accounting systems. I'm a big Xero fan, but what you'll find, particularly, compare some of the cloud accounting systems. I'm a big zero fan, but what you'll find, particularly as we roll into the end of financial year, everyone will have a sale on, so take advantage of it.

Speaker 2 6:47

The next thing to think about is whether or not you need some expert help, because quite often as business owners again, we look at the experts on the financial side of business the accountants, the bookkeepers as a bit of a luxury expense. But the thing is, accountants are people who are trained to get you a fantastic tax deduction. They're probably more or more capable of getting you that extra few bucks in your deduction than you even realize. I have seen on a few Facebook forums recently people complaining about the cost of their accountant because they might be getting a $900 return and the accountants charge them $300 or $400 and so they feel like they're kind of losing half of it. And look sure, maybe if they did the return themselves they'd be able to get just as much of a refund. But I don't know.

Speaker 2 7:40

I'm a registered BAS agent. I still get an accountant to do my return because I just like the checks and the balances that go into that. It means that I know I can submit my return with absolute confidence that everything is correct, and I also know that I am getting the best return possible on my business because my accountant is on my team. He is looking to find all of the deductions, but as he goes through, he's also able to give me advice on things that he might see in my business that I just haven't seen. So, for my money, definitely worth every cent that I pay to my accountant, and I would encourage you to either book a discovery call and talk to a few different accountants, ask how they can help your business grow, or to consider, if your accountant you feel that they're not really helping you, to consider using a different accountant.

Speaker 2 8:36

If you're doing things yourself, please just investigate what it would be like to work with an accountant. If you're doing things yourself, please just investigate what it would be like to work with an accountant. It doesn't mean that you have to do that, but it's really helpful, particularly at the end of financial year. Of course, you need to make sure that person is on your team. You don't want to be working with someone who is going to belittle you or make you feel like your business is just a little side hustle or hobby or hopeless. You want to work with someone who is prepared to be on your team, who is a registered professional, and you can find out whether they're any good or not by asking for some testimonials. See what other people think of the accountant that you're interviewing. Remember, working with a finance professional or like any expert, is a partnership, it's not a dictatorship. So you need to make sure that you are happy and feeling confident about your choice.

Speaker 2 9:26

Now the next part of this podcast, and for the rest of it, I'm going to cave you with saying that I am not aware of your personal or financial circumstances and because I don't know what they are, the advice that I'm going to give you from now on is just general in nature. If you're not sure about this, please talk to a professional about it, whether it's your accountant or whether you go and seek advice directly from the tax office. Very important to not make any decisions unless you are 100% sure that they are correct and within the law. So the biggest tip I can give you, apart from getting organized and having everything in one place for the end of financial year. So, like I said, if it's not a cloud accounting system, it's a spreadsheet. It's getting all of the business bits and pieces together in one place so that it's easy to send off to an accountant. Or if you're choosing to deal with yourself, so that you've got everything that you need in one place.

Speaker 2 10:24

It's really important to understand what you can and cannot claim, particularly if you are choosing to put a return in on your own. There are some things that you might think you can claim, but the law has changed so you can't claim them, or maybe you can't claim as much as you would like to. It's really important to understand what you can claim and make sure that you claim everything that you can. So this can include things like equipment membership fees, subscriptions, accounting and bookkeeping fees are tax deductions. Your subscription to cloud accounting software like Xero or MYOB another tax deduction. Things like insurance, bank fees, further education might be a tax deduction. Your wages and your contractor's wages, superannuation these are all things that could be a tax deduction.

Maximizing Tax Deductions for Year-End

Speaker 2 11:15

Now, hand in hand with this is the fact that here in Australia, tax rates are going to change on the 1st of July. That's personal tax rates, and if you're a solopreneur and you're listening to this, remember everything that you earn is essentially taxable. So the more tax deductions you have mean it lowers that income that you're earning and the less tax you have to pay. But, as I said, on the 1st of July, tax rates are going to be reduced right across the board, and so that means that next financial year you're going to be paying less tax than you would have paid this financial year. So, purely from a taxation point of view and you might've heard this on the news or on social media, I know there's been talk going around about this but if you are going to pay tax, if you are liable for tax this year, and if your business and cashflow can afford it, it might be smart to buy things that you need for your business this financial year rather than next financial year, because this financial year you'll have more tax that you owe, more tax that you have to pay, and so a bigger pool of money where you can claim a tax deduction, whereas next financial year there'll be less because of the reduced tax rates, and so you'll have less money that you can draw back from.

Speaker 2 12:34

People always get confused about tax deductions. Can I just say that you know they'll say things to me like well, I just bought a brand new computer that was $1,000, so the government's going to give me $1,000 back. That's not right. Basically, what happens with a tax deduction is, first of all, you can only get money back that you've paid in tax. So if you're below the tax threshold or your business is run at a loss and you have zero tax to pay, then the government is not giving you any money back because you've paid zero tax. The only way you get money back on your taxes is if you have a tax liability, so if you have money to pay. So, for example, if you have $2,000 that you owe in tax, you aren't going to get $1,000 back on your computer. What that $1,000 is going to do is it's going to reduce your taxable income by $1,000. And that will reduce your tax liability by whatever percentage that works out at. It's probably only going to be about 20 or 30%. So that is probably all you're going to get back on that computer.

Speaker 2 13:46

So always think about that, particularly when you're thinking, oh okay, what is it that I can claim at the end of financial year. And then you hear those stories about how you should spend up all this money and people go out and they go a bit crazy. It's not necessarily going to get you back what you think it will, and that's why I always say that you should keep tabs on your expenses. So, whether they're things that you're choosing to buy at the end of financial year or whether you're sitting down getting prepared for the end of financial year and so for that reason, you're looking at all of your expenses.

Speaker 2 14:17

Really important to take a look and see what you're spending your money on in your business. And I would challenge everybody who's listening and I say this all the time but see if there's one obsolete expense in your business, something that you've doubled up on something that you're paying for, that you can do for free. Maybe you're paying suppliers and you could get a better deal from them. Perhaps if you pay up front, they'll give you a discount. If you are paying for utilities, for example, or you've got a phone plan, reach out to those suppliers and see if you can get a deduction or a reduction sorry in that cost of doing business. And a word to anybody listening who is a retailer or who carries stock this is a great time of year to really liquidate as much of that stock as you can so that you can get some extra money in. But, more importantly, if you are someone who carries back orders so if you are ordering in advance and you've got back orders that might be coming into your business via your suppliers, it's definitely worth checking in and seeing what is going to land before the end of financial year, because really important to keep tabs on those expenses at all times. If you look at your numbers, if you look at your profit and loss and you are carrying a huge profit and you know that you're going to be paying a lot of tax and you want to reduce your tax liability for this financial year, it could be worth not just buying equipment and things for your business, but it could be worth pre-paying some of your expenses, so paying things like your rent or your utilities a month or so ahead in June, may or June so that you'll have less to pay in the new financial year and it will count as more of a tax deduction this financial year. Again, that would only be if the cash flow could afford it and if you know 100% for sure that you are going to have a large tax bill to pay. So again, another reason to have a chat to your accountant.

Speaker 2 16:15

If you have a retail business or you carry product in your business, now is a fantastic time to do a stock take. I know that any retailers listening to this will be rolling their eyes because stock takes are horrendous. Being someone who had two retail stores and an e-commerce store. I know exactly how horrendous they are, but believe me, the day or maybe two days that it will take you is to take us a couple of days to do our stock take totally worth it, because not only can you identify a stock that you can liquidate, but you will pull out broken stock that you can claim as a tax deduction. You can write it off Everybody's heard about a tax write-off so you can write it off as a tax deduction and it also might uncover theft. If you have a retail store, a bricks and mortar store, we used to find thousands and thousands of dollars worth of missing stock and the only reason we did that was because we did a stock take and we were able to reduce the amount of money sitting in our cost of goods sold pool because that stock was no longer available for us to sell. So again, another opportunity to find a good tax deduction.

Speaker 2 17:26

If you need some money for the end of financial year, you might like to chase up those people who aren't paying you. Of course, if you don't need money for the end of financial year because you've already got a big tax liability that you know you have to pay, you might hold off on sending out some invoices until the new financial year. So really have a look at where you sit in terms of how much money you might owe and then decide whether or not you're going to be chasing up slow payers, whether or not you're going to be sending bills out or whether you're going to be in a holding pattern until you get to the new financial year. The other thing to do to make life easy for your accountant and to make your end of financial year life easy is to set up an asset register so you can set this up at any time as you go through your business year, and a good time to do that is when you buy something new for your business, so a new computer, a new printer, for example, telephone, whatever it happens to be furniture, any new equipment in your business. That is a big, a large cost to your business. So I'd say anything that's over a thousand dollars. As the rule of thumb, just create a simple spreadsheet and set up an asset register so you'll need to put down what the item is, how much it cost, the date of purchase. If you have a cloud accounting system some of them, xero does this, for example you can actually set up an asset register inside of Xero and you can attach things like the invoice so that if you ever had any issues warranty issues you've got all the information right there at your fingertips. So definitely worth doing that because if you can hand your accountant an asset register again, they know exactly what they can depreciate for you and it's another tax deduction.

End of Financial Year Preparation

Speaker 2 19:18

So my big tip for you is to pay your super before the end of the financial year and it's best to have that money leave your account before the middle of June if you're here in Australia. Why? Because for some reason I still can't understand or explain at the end of the financial year it takes the super houses a very long time to process the super through. So if you want your tax deduction, your super annuation tax deduction, to count by the end of financial year whether you're paying super through a payroll or whether you're choosing to top up your personal super get that done by the 15th of June. It's only going to count as a tax deduction if it reaches your fund before the 30th of June. So most clearing houses super clearing houses have cutoff dates, but I think that the middle of June is a great rule of thumb If you've got some extra money and you are feeling generous, make a donation. There are so many needy and deserving organizations around right now that need our help, so it's definitely worth doing that. And, again, it's a tax deduction if you are sending money to a registered charity. So they're all my tips for sort of getting organized and being really prepared for the end of financial year.

Speaker 2 20:39

I want to mention, though, a few bits of housekeeping. So, as you're approaching the 30th of June, or once you hit the 30th of June keeping in mind that, for people who are really well-organized, a lot of people will send off their financial statements and have all their business updated, reconciled rearing to go ready and rearing to go in that first week in the new financial year. And even if you're doing your tax yourself, a lot of people are really tempted to submit their tax as fast as possible because they obviously want the tax deduction. However, it can take up to three weeks after the end of financial year, sometimes a little bit longer, for your information to hit the tax office. So think about things like if you're working for someone else, your payment summary information is not due until the middle of July to the ATO, so it can take additional time after that for the ATO, the tax office here in Australia, to have the information they need to be able to sign off on your refund, basically to be able to compare what your employer is saying with your return you've put in and say yep, that's right, we're going to grant that refund, for example. Also, things like interest from banks, share information, superannuation information it's all very automated now. There is definitely that give and take and sharing of information between the tax office and a whole lot of agencies around share organizations, superannuation houses, et cetera and it takes time for that information to reach the tax office. So a lot of accountants will actually take July off because they know that when they get back in August, it's all systems go. All the information technically should have reached the tax office and they can start processing returns and actually get those returns through, processed and back to their clients within just a few weeks.

Speaker 2 22:38

So keep that in mind in your rush to get things finalized. You probably don't need to put as much pressure on yourself as you think. The things to do, though, is, once you hit the 30th of June, it's really helpful for your accountant and also for yourself, if you're doing your return yourself to grab a copy of your bank statements so that it clearly shows what was in your account on the 30th of June. Put those to one side, ready to send off to your accountant. If you are running a payroll, you need to get that sorted out and have your single touch payroll information to the tax office by the middle of July. That's really important, not just for your business but for all of those people who work for you that you have put through your payroll, because they obviously want to get their returns. So if you are slow with your information going out and remember that includes things like the tax that you've collected on their behalf, the superannuation you have collected on their behalf then it's going to slow down them getting back their refunds and I'm sure there are lots of people who will be looking forward to refunds in the second half of the year just so they can give their bank accounts a bit of a boost In terms of superannuation. Here in Australia superannuation will increase by half a percent come 1 July. So we'll not just have tax deductions but we will have an increase of half a percent on the 1st of July. So SIPP goes up to 11 and a half percent and if you are running your payroll through a registered product like MYOB, xero, for example, or some of the payroll products that are around and you need to. By the way, if you're employing staff and you are locked into single touch payroll, then these will just update automatically for you, so you don't you won't need to worry about those.

Speaker 2 24:30

I think, another thing to really look at as we get to the end of a financial year and again it's worth a conversation with your accountant about what your business might look like in the year ahead. And this is a conversation you might not be able to have until your current year's taxes are processed. It just depends on the relationship you have with your accountant and how familiar they are with your business. But it's worth noting that your compliance obligations might change at the end of the financial year. So, for example, if you are someone who has been earning under $75,000 here in Australia, but in this last financial year you have turned over or earned over $75,000, you will have to register for GST and you'll have 21 days to do that from the time you hit that 75K mark. So if you're unsure what you are liable for going into the new financial year, definitely worth having a chat to your accountant.

Speaker 2 25:31

There are so many different taxes that you need to pay here in Australia if you are running a business and if you are employing staff, so it's really up to you to understand what they are, when they are due and how much on average, you're going to need to put aside to cover off those commitments. And when you know that information, you can plan ahead, you can put those dates in your diary and you can make sure that as you go forward, you're saving as you go to pay those taxes, because there is nothing worse than being in tax debt. I promise you, I have been there and it's not nice. Last things that you will need to do if you are employing staff in your business or you have a company and you are paying workers comp is to not only review that insurance and review all of your insurances, by the way, particularly if they're due at the end of the financial year but if you are paying workers comp, then you need to send off an actual workers comp declaration because you might have underpaid your insurance, your workers comp insurance, you might have overpaid your workers comp insurance. So when you send the actuals off to the workers comp organization, what will happen is they will work out whether you owe the actuals off to the workers' comp organisation. What will happen is they will work out whether you owe them money or whether you are due a refund. Now they won't chase you for this. They are notorious for not giving refunds unless you put your hand up and ask for one. So really important to declare those wages. But, more importantly, keep an eye out for the new information around your workers comp, because it can often end up in junk and get absolutely lost.

Financial Planning and Setting Goals

Speaker 2 27:11

So the last thing I want to talk about is once you're through the end of financial year and even prior to the end of financial year, when you're in the flow, it's definitely worth setting aside a day, half a day, if you can do it quickly, but I always like to set aside a day where I do some serious business planning for the year ahead on a financial level. So not only am I looking at my business as a whole, deciding what stays, what goes, what offers I continue with, what offers I'm going to close down or change, in that I'm looking at my pricing and my expenses and all those sorts of things, but in conjunction with that, I look at a budget for the new financial year. So I have an idea of what I want to earn, what I'm happy to spend, and with that in mind, I create a brand new cash flow forecast. And so doing that just gives me the peace of mind that I'm always going to know what I have to pay and when. And I'm doing that with the new vision for my business and for what's ahead for me in the year you know at the top of my mind. So think about. You know, as you're doing this, not just what's working and what isn't in your current business, but some of those opportunities that you know might be coming up in the year ahead that you can really take advantage of. And that plan then becomes the jumping off point for your marketing and everything else that you're going to do in your business as you move forward. So really important to take the space, take the time and to do that work.

Speaker 2 28:40

Another good thing to do while you're doing that is some tax planning. So, particularly if your business has done really well maybe it's not done so well, but tax planning is always a great idea. It helps you to think about your financial goals, which I always love. I love adding a financial goal. So you know, by that I mean financial goals could be just getting better organized on your finance, really taking time to understanding, you know, understanding your finances, or making that commitment. It could be about hitting a revenue target. It could be about launching a product like a book or a course, for example. There's lots of different financial goals that you can put in place. But when you do that in conjunction with some tax planning and you might need to rope your accountant in for that once you know what your goals are for the financial year, the new financial year that's ahead, it really helps you set the course for success, in my opinion. So definitely worth doing those couple of things.

Speaker 2 29:38

And, of course, you know, end of financial year, new financial year always a good time to review your prices, I think you know. It's also a good time to think about the profit number. What profit do you want to earn? But pricing is a big thing, especially now I've discussed it in my last couple of podcasts about when times are a bit tough and we're not getting the leads we want. The temptation is to cut prices, to discount, but sometimes, rather than doing that, reviewing an offer and coming up with a new offer that has less stuff in it, that is going to take you less time to deliver and you can deliver at a more reasonable price, is a great way to help you still make the money you need to make for every hour of your work. That's going to cover all of your costs, because the last thing you want to be doing is discounting a product, that is, you know that is going to take you a lot of time to deliver. And then you get to the end of that and you think, well, okay, I've worked. Instead of working for $70 an hour, I've worked for $35 and I haven't covered the cost of my business and so on. So always think about that before you discount. But end of financial year great time to really take a deep dive in and have a look at that.

Speaker 2 30:50

The other thing that I'd really suggest that you do is to have a look at your rainy day account, because I know for a number of business owners, they have had no choice but to dip into their rainy day account over the last few months, and that is completely understandable. That is exactly what the rainy day account is there for, but it's then worth making some decisions about what that account is going to look like as you move forward. So what is it you can do to boost that rainy day account, to get it back up to where you want it to be, so reimbursing some of those savings that you might've taken out. Or, if you don't have a rainy day account, maybe starting one, and so a good way to do that is, if you get a tax return, you can pop it into your rainy day account a great way to start your rainy day account. Or you might just take a percentage of everything you earn and choose to pop that into the rainy day account as well. So definitely think about that rainy day savings account Starting small. You'll be surprised how fast you can grow that account. I've said this before, but when I started my rainy day account, I was in a $42,000 debt mess with the ATO, but I literally started it by collecting coins because I didn't have enough money to go down and open a separate bank account. So there are ways to start. There are ways to grow that account, but just keep that in mind as something you might want to do as you go into the new financial year.

Speaker 2 32:18

And the other thing to keep in mind as you hit the new financial year is that there are lots of business grants around that sometimes will kick off on the 1st of July. So here in Australia you can get grants at all different levels of government, so that is federal, state and local government. Most of those grants will be on businessgovau. That's the website you can head to to check out those grants. But if you Google grants business grants in whatever country you are in hopefully you can find some grants that might be great for your business.

Speaker 2 32:55

I think being organized for the end of financial year, like everything, is about taking the time not to just work in your business day after day, but taking that time, setting yourself some specific time to step back and work on your business and get super organized, because that is the way that you are going to create a business.

Speaker 2 33:19

That speaks to your definition of success.

Speaker 2 33:22

And while we're on that, it would be remiss of me not to say that, as we finish one financial year and we head into a brand new financial year, it's a great idea to re-evaluate what success is going to look like for you in the financial year ahead, because, as someone said to me the other day, it seems like nobody got out of first gear in this financial year, particularly here in Australia, that a lot of us have been overwhelmed by the big issues that we've seen locally and around the world and that has stymied us and our business as we've gone into this year, and I think there's probably something in that.

Speaker 2 34:05

So if you are feeling like this is you as you go into the new financial year, then definitely take some time and think about what success looks like for you as you go forward. And just to give you that bit of a boost, it might be a great idea to find a group, find your tribe, find your community of business owners that are going to give you that positive energy that you need as you go into this next financial year, so that you're fired up, you can get your business singing and make the money and, more importantly, the profit that you deserve to make. So if you need help with your business, why not check out my brand new book Become a Business Money Magnet Simple Habits to Manage your Money and Supercharge your Profits? It's available now in all good bookstores and I hope you have found some great tips in this episode for end of financial year and that your end of financial year is a breeze and your new financial year is even better.

Speaker 2 35:15

Okay, until next time.

Speaker 1 35:19

Thanks for listening to the Secrets of Successful Business podcast. For more information on all things business, head to flossycomau and make sure you hit subscribe on the show so you don't miss another new episode. If you're enjoying the show, please give it a quick rating or review, share it on your socials or with friends who might enjoy it. Catch you next time.