Review Financial Statements
The first thing business owners should do is review relevant financial statements, including your profit and loss statement, balance sheet and cash flow statement. These documents provide valuable insights into the financial health of your business and can help you identify areas for improvement. This step helps ensure all transactions are recorded correctly and that any discrepancies are resolved promptly.
Stocktaking is an essential part of the EOFY process for hospitality businesses. It involves counting and valuing all inventory items, including food, beverages and other supplies. Stocktaking not only helps you update your records, but it also assists in identifying theft, wastage or other discrepancies. Consider using software solutions to streamline the stocktaking process and improve accuracy.
Reconcile Accounts Receivable and Payable
Make sure all outstanding invoices have been issued and ensure you’ve collected payments from customers. Similarly, review your accounts payable and settle any outstanding bills to avoid late fees or penalties. Reconciling these accounts will give you a clear picture of your cash flow and help you make informed financial decisions.
Prepare for Tax Obligations
As a hospitality business, you need to be aware of your tax obligations, such as the Goods and Services Tax (GST), Fringe Benefits Tax (FBT) and Payroll Tax. Ensure you’ve recorded and reported all relevant transactions to avoid potential penalties. If you’re unsure about your tax obligations, consult a tax professional for guidance.
Claim Tax Deductions and Concessions
Claiming tax deductions and concessions is essential for reducing your taxable income and maximising your profitability. Common hospitality deductions include:
- Employee wages and superannuation
- Stock and inventory
- Rent and utilities
- Repairs and maintenance
- Insurance premiums
- Marketing and advertising expenses
- Depreciation on assets
Review Employee Records
Ensure that all employee records are up to date, including contact information, payroll details and leave entitlements. Review your employees’ superannuation and other obligations and make any necessary adjustments before the EOFY. Remember to also check for compliance with relevant awards and workplace laws.
Be Wary of Tax Refund Scams
Fraudsters often target small businesses during tax time. Be vigilant about protecting your sensitive information and always verify the authenticity of any communication claiming to be from the Australian Taxation Office (ATO).
Assess Business Performance
EOFY is an excellent time to evaluate your business’s performance and set new goals for the upcoming financial year. Analyse your financial data to identify trends and areas for improvement. Consider conducting a SWOT analysis (strengths, weaknesses, opportunities and threats) to gain a comprehensive understanding of your business and its position in the market.
Based on your performance review, update your business plan and budget to reflect your new goals and strategies. Ensure your budget includes realistic projections for revenue, expenses and cash flow. Regularly monitoring your budget throughout the year can help you stay on track and make necessary adjustments as needed.
Review Your Business Structure
As your business grows and evolves, your current structure may no longer be the most tax-effective option. Consult with your tax agent or accountant to determine if a change in business structure could be beneficial.
Evaluate Insurance Coverage
Review your insurance policies to ensure you have adequate coverage for your business’s unique risks. Consider general liability, property, workers’ compensation and other industry-specific coverages. You may need to update your coverage based on changes in your operations, such as adding new services or expanding your premises. Consult with an insurance professional to determine the appropriate coverage for your business.
Check Compliance with Industry Regulations
Hospitality businesses must adhere to various regulations, such as food safety, liquor licensing and workplace health and safety. Review your compliance with these regulations and address any gaps or areas of concern. Failure to comply with industry regulations can result in fines, penalties or even closure of your business.
Work With a Registered Tax Agent
Engage the services of a professional accountant or financial advisor to help you navigate the EOFY process. To ensure that you receive the best advice and assistance with your tax obligations, it’s crucial to work with a registered tax agent.
Plan for Success in the New Financial Year
Take this opportunity to set goals and create a roadmap for success in the new financial year. Identify your objectives, develop strategies to achieve them and monitor your progress throughout the year.
By following this end of financial year checklist, hospitality business owners and managers can set themselves up for success in the upcoming year. If you’re looking for advice and assistance, Carbon Group is here to help. Contact us today to learn more.