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Start The New Financial Year Right: Tips For Small Businesses

Q: When did the 2023 financial year start?

In Australia, the financial year does not follow the calendar year, instead the financial year runs from 1 July to 30 June the following year. Therefore, the 2023 financial year started on 1 July 2022 and will end on 30 June 2023. The 2023/24 financial year runs from 1 July 2023 to 30 June 2024.

By QuickBooks Australia

July 4, 2023

10 Tips to Help Small Businesses Start the New Financial Year Right

Starting the financial year right is fundamental for small business owners. It allows you to approach challenges with confidence and ensures that your business finances are under control.

By dedicating time to reviewing the previous year's performance and preparing for the start of the financial year, you are not only equipped to make informed business decisions, but it also enables you to effectively manage risk and stay updated on regulatory industry requirements.

This article will assist your business in identifying areas to address before you commence a new financial year and offers tips for a smooth transition into a new financial year.

In this article you will learn how to:

Review all recorded transactions from the previous year
Perform an audit on your technology and supply chain
Review risk management measures including contracts and insurance cover
Update your budget
Assess your pricing strategy
Enhance your cash flow management
Check your compliance obligations
Automate, automate, automate
Leverage incentives, grants and subsidies
Stay on top of your finances with accounting software

4 tips on what small businesses can do to prepare for the new financial year

In order to ensure you start the new financial year strong, here are several things you can do beforehand. Consider these a “review and reset” exercise to position your business well before the new year kicks in.

1. Review all recorded transactions from the previous financial year

It is essential to rectify mistakes, missing entries and discrepancies in your business accounts. This builds a reliable foundation for future financial analysis and decision-making. It is advisable to maintain these records digitally for easy accessibility and long-term management. Cloud accounting software such as QuickBooks Online is an efficient way to ensure your financial records are stored securely.

As a business owner, the general record retention period is five years, according to the Australian Taxation Office (ATO). However, certain records may need to be kept for much longer, such as records in connection with an income tax return or documents that have been corrected or amended.

Simultaneously, your records will present you with a valuable source of data from which you can derive financial reports and insights on business performance, customer types, expense patterns and cash flow trends. Therefore, reviewing financial records will aid in strategic decision-making, performance evaluation, forecasting and compliance in the new financial year.

2. Check in with your accountant

This presents an opportunity to gain insights from accounting experts. Keep in mind that accountants charge by the hour, so clearly communicate your business needs and requirements. Below is a list of queries to discuss with your accountant:

The status of your financial records and whether any additional information is necessary
Any recent or upcoming legislative or regulatory developments that might affect your business
Suggestions on improving financial records, better expense control, or meeting compliance requirements more effectively

3. Perform an audit on your technology and supply chain

A periodic technology audit can provide much-needed reassurance that the systems and processes you have established continue to function as intended and meet business needs. It is essential to remain updated on any changes in compliance requirements from your software providers, including any developments related to viruses, malware and breaches.

Additionally, auditing the components of your small business supply chain including your suppliers, procurement, inventory management solutions, distribution channels, warehousing and storage, transportation and logistics can help you identify ways to streamline the delivery of your products in the new financial year.

Conducting an audit will provide you with a systematic approach to verifying the accuracy, compliance and reliability of your operations, records, processes and systems.

4. Review risk management measures including contracts and insurance cover

A close cousin of the audit process is your risk management framework, however elaborate or simple it may be. By identifying and assessing various risks including the internal controls you have established, you can not only detect and prevent fraudulent activity but remain compliant with laws, regulations and industry standards applicable. In line with the principle of continuous improvement, your risk management strategy will support the continued growth of your business.

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6 tips to help small businesses ensure a smooth transition to the new financial year

These tips were developed with a keen focus on the financial aspects of running your small business to ensure a smooth transition into the new financial year. While important throughout the year, they can take on added significance at the start of a new financial year, with positive flow-on effects if done right.

1. Review your financial goals

Allow the records, which you have maintained and reviewed, to guide you in developing your new financial goals. Ensure you are taking the appropriate metrics and ratios into account to evaluate profit margins, liquidity and efficiencies. Set specific, measurable, attainable, relevant and time-bound (SMART) goals for your business.

2. Update your budget

Your records will inform the changes you make to your new year’s projected revenue lines and expenses. When updating your small business budget, strike a balance between your lofty goals to grow your business and the practicalities of addressing unexpected events and appropriately managing risks.

3. Assess your pricing strategy

Your pricing strategy is the method you develop to establish the optimal price for your product or service. Typically, it would account for factors such as revenue goals, target audience, brand positioning and product attributes, and your unique selling proposition. However, an effective strategy also needs to consider external factors such as competitor pricing, consumer demand and economic or business trends.

4. Enhance your cash flow management

According to Alan Miltz, co-founder of Cashflowstory, “revenue is vanity, profit is sanity, but cash is king”. Having good cash flow is key to being able to pay bills and wages on time and to keep the business running smoothly.

You need a system in place for regular cash flow analysis to guide your business planning. This will help you address current liabilities, identify liquidity bottlenecks and plan for projected expenses.

5. Check your compliance obligations

Businesses, of any size, typically have a number of obligations to meet in order to comply with applicable legal frameworks. For example, business licences or permits may require yearly renewal. These may vary based on location, industry and type of business. If your small business employs staff, you will need to ensure you fulfil your duties, as an employer, to pay wages, overtime and meet workplace safety regulations.

Additionally, there are tax compliance requirements such as lodging tax returns and Business Activity Statements. Keeping an eye on regulatory changes ensures that you are able to take appropriate action in a timely manner.

6. Leverage incentives, grants and subsidies

You don’t need to do it alone. If you look purely at the number of small businesses by employment, the Australian Bureau of Statistics (ABS) defines small businesses as those with less than 20 employees.

Did you know that, as at June 2022, over 97% of all Australian businesses were small businesses?

The good news is that, across a range of industry sectors, there are multiple grants and funding in the form of incentives and subsidies on offer.

Your job is to keep your eyes peeled for such financial support as these can change by sector and over time. A useful starting point is the government’s grants and program finder which connects Australian businesses to government information, grants, registrations and support.

Stay on top of your finances with QuickBooks

With a range of accounting software applications available in the market today, there is immense value in taking advantage of suitable tools such as QuickBooks Online, designed with small businesses in mind. A cloud based approach to accounting solves many challenges including reducing error, preventing duplicity, supporting storage and transmission and the sharing of data and insights across teams and locations.

One of the greatest advantages is the ability to access your information anytime, anywhere. With online accounting tools, you have the unique opportunity to reduce the manual load by automating accounting tasks. This saves not only time and money but can aid in providing a more accurate sense of your business and enable quicker decision-making.

FAQs

How do I prepare my business for the new financial year?

Begin the new year by looking back at the year gone by. While past performance is not the sole determinant of your future business performance, it can highlight shortcomings, trends, patterns, and provide insights about top selling products and services to help you plan for the future. A data-driven approach will serve you well as you examine what worked well, what challenges presented themselves and how these were addressed and the type of developments that may eventuate such as service refinement or new product offerings.

Does a small business need to prepare financial statements?

Compliance requirements differ based on how the business is defined and established. Large proprietary companies are required to prepare and lodge a financial report as well as a director’s and auditor’s report. However, small proprietary companies including small businesses are generally not required to prepare such reports. That said, small businesses are required to retain, for an appropriate length of time, adequate financial records.

What preparations should a small business make at the end of the financial year?

To set your business up for success in the new financial year, there are a number of areas in your business that you should review. From a finance perspective, you should run a few standard financial reports and analyse your cash flow statements. These will inform decisions about your business’s direction. From an IT perspective, this is a time for backups and a review of files stored. From an HR perspective, it will be useful to consider year-end incentives and staffing needs. There may also be other general business activities that require your attention such as your website and marketing plans. To assist you in taking care of these issues, take a look at our end-of-year checklist for small businesses.

What preparations should a small business make at the start of the financial year?

Here are four things you should do at the start of a new financial year.

1. Review all your recorded transactions from the previous year to gather fresh insights.

2. Check in with your accountant to ensure everything is on track and to discuss any new developments in your business that may have a financial implication as well as to identify potential regulatory issues which may impact you.

3. Perform an audit on your technology setup as well as your supply chain to evaluate strengths and weaknesses.

4. Review your risk management measures to ensure they continue to serve your business.

When did the 2023 financial year start?

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Start The New Financial Year Right: Tips For Small Businesses

10 Tips to Help Small Businesses Start the New Financial Year Right

4 tips on what small businesses can do to prepare for the new financial year

1. Review all recorded transactions from the previous financial year

2. Check in with your accountant

3. Perform an audit on your technology and supply chain

4. Review risk management measures including contracts and insurance cover

Grow Your Business with QuickBooks

6 tips to help small businesses ensure a smooth transition to the new financial year

1. Review your financial goals

2. Update your budget

3. Assess your pricing strategy

4. Enhance your cash flow management

5. Check your compliance obligations

6. Leverage incentives, grants and subsidies

Stay on top of your finances with QuickBooks

FAQs

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Looking for something else?

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