Strategies to fix your Tax time mistakes for the New Financial Year

In the lead up to end of the financial year, many small business owners made the mistake of making tax reduction their number one goal. Local accountant and business development expert, Wayne Lock shares his strategies for minimising the impact of this on their business.

The end of financial year has seen many local entrepreneurs taking up the Government’s Investment Allowance, purchasing expensive items such as cars and computers in order to take advantage of the tax reduction. In addition to this, at the advice of their tax agents, some business owners have also bought stock for the next financial year, pre-paid their overhead expenses and delayed debtor collections until the New Financial Year, in order to reduce their profits and their tax bills.

Achieve Business Solutions are the accountants Frankston business owners trust. According to director Wayne Lock, local business owners that have adopted these measures now face a challenging situation in the new financial year, with the following factors impacting on their business: Reduced Cashflow, restricted by the increased expenditure; Limited ability to attract new business, due to less cash to invest in marketing and production resources; A decreased value of the business, as a result of reduced profit and; Inability to accurately measure and analyse business performance, due to the delaying of account receivables and prepaying of expenses.

However, it’s not too late for these business owners to turn their situation around. Wayne, who offers business development coaching through his firm (Achieve Business Solutions), offers his;

Top Five strategies for businesses to start fresh in the New Financial Year:

  • Create a financial growth strategy for the next 12 months. “Businesses need to be setting 2014-2015’s KPIs and performance drivers now,” says Wayne Lock. “Use these as a framework to work against over the next year to boost the performance and success of your business.”
  • Increase marketing and initiative-based expenses. “It’s imperative to keep these up, as they are vital for increasing customers and generating revenue. Marketing is the key driver in growing your business and securing future revenue and Cashflow.”
  • Reduce non-marketing, non-advertising and non-production expenditure. “It’s simple – the less cash you spend, the more you have. Ask for better deals from suppliers, and reduce the high value expense items, whose absence doesn’t disrupt the business, first.”
  • Collect from debtors straight away. “You don’t have to do what everyone else is doing and carry out jobs on account. You are entitled to ask for payment on completion, or even in advance. The sooner you collect what is rightfully yours, the sooner the pressure that last year’s expenditure may have had on your Cashflow will be eased,” says Wayne Lock.
  • Get rid of your obsolete and surplus stock. “Focus on moving your stock and selling it as quickly as possible. Converting your stock to cash will again free up money available to you in your business.”