Are Your Business Numbers Up To Date?
If you don’t know where you are, how can you plot where you are going?
Those who leave completing their end of year accounts and tax returns until the last possible minute are doing themselves a disservice – particularly if you run a business.
The 2020 financial year finished more than 7 months ago – and there are less than five months to go before the end of the 2021 tax year. By now you should have your annual 2020 returns completed, or at the very least your tax accountant should be contacting you to get them finalised ASAP.
We realise that completing annual accounts and tax returns is not the most exciting job for most – but it is an absolutely critical part of running a business.
The following are 10 very important reasons that you should move quickly to complete your 2020 accounting and tax.
- How did your business perform overall in FY2020 compared with FY2019?
- Which areas of income have improved and which are in the decline?
- What expense items have increased and why? Where they planned for or unexpected?
- What is your tax position for 2020 – remember your bookkeeping software will only tell you part of the story because there are many things that are done only in the end-of-year accounts like bad debt write-offs, asset depreciation and Division 7A loan repayments?
- If you have a tax bill you have time to plan. If you owe the ATO some money, then you can often delay the lodgement and give yourself time to plan for the payment.
- If you are due a refund, then it is better back in your bank account as working capital.
- Where there any one-off effects (positive of negative) that impacted on the 2020 result (Covid downturn? Stimulus payments?)
- Your final 2020 results will establish a base by which you can assess the year-to-date (YTD) performance for 2021.
- The 2020 results compared with your 2021 YTD will provide you with the opportunity to conduct projections and tax planning for your 2021 result.
- If you are planning to purchase business assets to write off for 2021, then you need to plan this before the end of March, because there can be significant delays in supply of the assets and also delays in obtaining finance to purchase the assets.
So when you receive those reminder calls and emails from your accountants with requests for outstanding information needed to complete returns, remember it is going to be in your (and your businesses) best interest to put aside some time to answer those queries and get your numbers finalised. And if you are concerned that your tax agent or accountant has not been in touch, then find out why and make sure you get things moving.
If your needs cannot be met in a timely manner, then you may need to contact a firm with the capacity to complete the work for you as soon as possible.