As the start of a new financial year, SOFY, looms, now is the time to set your business up for success. And that starts with planning. To help you understand what you can do now that will pay dividends later, the experts at The Access Group have compiled the top 5 things you need to know to close out the financial year and set yourself up for a flying start to FY23.
How to best prepare ahead of the new financial year?
Get curious about your year ahead
You need to know what the year ahead looks like for your business. What do you want to achieve? What’s your budget? KPIs? Will you need to hire more people?
Undertake some scenario planning. With inflation and interest rates on the rise that’s even more important this year. What would be the impact on your business if expenses blew out? If fuel costs increased 10% for example? Wages? Interest rates? Would you need a loan? Understand the different thresholds for your business and plan accordingly.
Don’t let the deduction boat sail without your refund
Hindsight is the greatest teacher. But if you haven’t spent to take advantage of incentives and deductions like assets you might need, 20/20 hindsight is only going to fill you with regret. Make sure your payroll deductions are reported correctly, and avoid common like:
- Not reporting Salary Sacrifice Superannuation as “Reportable Superannuation”
- Not reporting Union Deductions as “Fees”
- Reporting donations made through payroll as “Workplace Giving”.
Get to grips with compliance and changes
The Access Group recommends doing training before SOFY to get on top of system, compliance or legislative changes. This year, for instance, you need to check your employee’s contracts to see if superannuation payments are inclusive in their salary. With superannuation going up to 10.5%, the extra 0.5% may need to come off an employee’s salary.
While most employees pay super on top of annual salary, if you pay a “total package with superannuation”, you’ll need to adjust salaries. Review your payroll to see if you have any employees with a Tax Variation in place for the current year. Remind them to provide their new Tax Variation approval from the ATO, and if it’s not received, change to standard tax.
Do a systems review
Now is a great time to take a few hours out of your day-to-day activities to review your system, look at the allowances, deductions, leave and super and ensure everything is working as you would expect. Are STP2 changes sorted? Compliance?
Look for opportunities to streamline. Could you use tools to automate some work and eliminate manual entry (and errors)? Would hiring a bookkeeper to come in monthly give you cleaner records at year end and more time back during the year? Are you using the most appropriate software for your industry and organisation? Could you simplify things by connecting payroll and finance systems on a single platform like Access Workspace?
Optimise payroll for the year ahead
Whether you’re paying a hundred or a handful of people, there are things you can do now that will make payroll easier to manage throughout the year. Create a payroll schedule for FY23 – include payroll cut off dates, payroll due to bank dates, names of payroll bankers/approvers (ask when they are on leave to make sure someone is always available for banking), and a leave planner, so there’s a replacement for when you take leave.
- Set up a monthly email with payroll deadlines – include timesheets, leave forms and expenses and send it to all employees.
- Do a public holiday calendar review – check they don’t clash with a banking day. If they do, let your approvers know in advance.
- Annual Awards check – the Academy Awards are held once a year. Make reviewing the Awards in your business an annual event too.
To maximise deductions, incentives and entitlements, ease the end of year rush and set your business up for success, you need to be prepared. Going through your payroll and reconciling now – and making it a monthly habit – will mean no nasty surprises next EOFY.