Look forward, not back, at tax time

Around 10 per cent of SMEs lost money last year due to poor financial management, according to one accounting firm, which shows the importance of tax record keeping.

“Assessing financial management practices should be at the top of the list for all small business owners. Many businesses make entirely avoidable mistakes that cost them big bucks,” said Clive Barrett, executive chairman of bookkeeping franchise First Class Accounts.

“Furthermore, our research showed three-quarters of small business owners didn’t even set an annual budget last year. Another 28 percent did not review cash flow, stating: ‘As long as there is money in the bank, I don’t worry’. This is quite concerning given good financial management practices, seeking new ways to boost profit and setting a budget are fundamental to business success.”

Mr Barrett said business owners should be using the remaining five weeks of the financial year to look to the future and ensure they have adequately planned for the new year.

“It’s easy to get bogged down in sorting the paperwork at this time of year and highlighting what hasn’t been achieved, when it is actually the perfect time to assess your business performance while you are so focused on the finances,” said Mr Barrett.

“Now is the time to focus on what has worked for you, what hasn’t and what you’d like to improve on over the next year. The new year presents a fresh start and requires a strategy to ensure your business is as profitable as it can be.”

He added: “Planning for the next financial year helps reduce financial risk, leads to business growth, encourages you to prioritise and focus, and prepares you for every eventuality. It is imperative to long-term business success.”

According to Mr Barrett, business owners can use these tips to ensure their end of financial year runs as smoothly as possible:
• Keep your records properly organised;
• Set new financial goals for the year ahead;
• Review your business plan;
• Ensure you have adequate capital support;
• Focus on sales growth;
• Create additional revenue;
• Assess your expenses.

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