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H&R Block’s Mark Chapman provides tips to get your small business in shape this new financial year.
Holiday periods can be a stressful time for small businesses. Cash flow often reduces substantially but costs typically stay the same, which is why so many small businesses experience severe financial difficulty in between January and March, and after the upcoming Easter break.
So, as we look forward to 2019, here are my tips to surviving the business slumps and setting your business up for a prosperous new financial year.
Make sure you invoice before holiday shutdowns
If you don’t want the festive cash flow drag to flow into the new financial year, make sure you invoice for all work done before the a shut-down period starts; preferably well before. If you’re lucky, customers will pay before the shutdown.
Avoid big-ticket purchases
If you’re thinking of buying large items of plant or equipment for your business, avoid making the purchase until your cash flow is stable. You don’t want to be faced with a hefty bill for a new item of plant which you can’t pay until revenues picks up.
Collect your debts
In relation to invoices already issued, try to get as much cash in as quickly as possible. With many customers’ accounting departments closing for between two and four weeks during Christmas, and one week at Easter, you know you won’t be getting paid at any point in that period so chase your debts now and chase them hard.
Don’t raid the tax and super piggy bank
With so many public and staff holidays between now and the end of April, not to mention long hours in the office, it can be easy to overlook the payment of taxes such as GST as well as superannuation.
No matter how tight your cash flow, set aside adequate funds in a holding account, and don’t dip into it. The ATO does not make a friendly creditor!
Invest in a bookkeeper
Running a small business isn’t easy. In between generating turnover, purchasing supplies and managing staff, many business owners find that the much vaunted “freedom” of running a business rather than being employed can lead to the exact opposite of freedom. Working days expand, leisure and family time disappears as weekends and evenings are spent keeping on top of the essential tasks.
On top of doing what you need to do to run the business, sometimes something has to give and often that’s looking after the accounting side of your business. But failing to stay on top of your bookkeeping can have severe repercussions. Not only can it affect your ability to meet your GST and income tax obligations, it can also mean that you simply don’t have a firm handle on how well your business is actually performing. Sooner or later this can lead to trouble with creditors and banks. So, make investing in professional bookkeeping services a new financial year’s resolution for 2019.
Not only will you get valuable time back which can be spent in doing the things you do best, like making a profit, you’ll have access to a qualified resource who understands the needs of your business, your reporting obligations and the technological solutions to give you the end-to-end solutions you need.
Note: H&R Block’s advice is for general use. Always seek tailored information to suit your circumstances.