End of Financial Year To Do ListWe are approaching two months out from the end of the Australian financial year end. A great time to identify your goals for between now and EOFY. My view is that these goals will be both in respect of your clients and your own business. In short, I’d like to see accounting firms kicking the following goals between now and 30 June:

  1. ATO Lodgment requirements met
  2. Tax planning completed for clients who will benefit from it
  3. Business planning and budgeting completed for clients who will benefit from it
  4. Business planning and budgeting for your own business

 

1. ATO lodgments met

I wrote on more detail on this recently (see here). You need to have nailed your 85% on time lodgment requirement for the ATO and if you need help to get returns completed I’ve made a suggestion for you.

2. Tax Planning with Clients

For many firms May and June is when they reach out to clients to do some tax planning. In Australia this is a pretty well established pattern but I still observe that some firms are not actively doing this or are doing it with only a small number of clients, when many more would benefit from it. Obviously not every client is going to need this but I suggest that most, if not all of your business or high net worth individual clients will. For some firms this can be challenging as it often falls to the most senior people. With the help of a well thought through checklist to use with each client I believe quite a bit of the work can be completed by less experienced team members.

Some of the things accountants tell me they like to cover in tax planning include:

  • Considering what income and expenses can be brought forward or deferred as may make sense from a tax and commercial perspective
  • Identification of any major changes from prior year – for example there could have been significant transactions that need consideration. Sometimes your clients will do something and not tell you and if you know prior to the end of the financial year there may be some actions to be taken to improve the tax impact.
  • A check that the structures employed still make sense

You will have your own checklist you use to guide your conversation with each client. If you don’t I suggest you create one.

I am often asked how much should be charged for tax planning. The answer, unsurprisingly, is it depends. You may have some clients on an annual package which includes this service. If not, be sure to make it clear to each client the fee to be charged and why it makes  sense to complete a review. Often your fee might be broken into two parts – the first being to do the planning review and the second to implement recommendations. The planning review may or may not identify opportunities, but for most businesses there will be something you pick up.

3. Business Planning and Budgeting With Clients

Some of your business clients would no doubt benefit from having a knowledgeable third party (aka their accountant) facilitate a planning day. This might involve helping the client to answer three questions:

  • Where is the business today?
  • Where does the business want to get to?
  • What activities need to be scheduled and completed to get to where we want to get to?

Having helped your clients get clear on what they are going to do in the coming financial year there is a further opportunity to help them build a budget that reflects that. As you know, budgeting can sometimes lead to a rethink of plans because “the numbers don’t stack up”. So the planning and budgeting process might involve a few iterations. Many SME owners are ill equipped to do this so your input will add value.

I’m a big fan of the power of a three way budget – that is P&L, balance sheet and cash and in my experience this allows some very powerful conversations with clients, including a dose of reality! Often an owner will assume they will be able to take a certain amount of cash out of the business, but when the numbers are done it becomes obvious that this will not be sustainable.

The other great thing about doing budgets with your client is that you can then assist them monthly or quarterly in comparing actual results to budgets and understanding what the numbers are saying.

 4. Business Planning and Budgeting for your own business

Having given your clients the benefit of planning and budgeting don’t deny yourself those same benefits! In this instance the knowledgeable third party to assist is going to be someone like me. When I work with firms on planning a key thing for me is to ensure that the goals and aspirations of the individual owner/s are considered and mapped against the goals and aspirations for the business. My experience tells me that an alignment between personal and business goals and alignment between each of the owners, is vital for success. Doing a three way budget for yourself is important too. Popular tools for this seem to be Castaway, Calxa, Spotlight Reporting, Fathom and FUTRLI (previously Crunchboards).

 

There is a lot to do and I believe that if you can achieve these four goals you will not only end the financial year on a positive note, you will have set yourself up for success in the new year.

 

Rob Pillans is an Accounting Firm Management Guru and Accounting Firm Coach, dedicated to helping accountants define their version of success, formulate the strategies and implement them. He provides hands on coaching, consulting, training, mentoring and facilitating all over Australia and New Zealand. He writes a monthly newsletter, which you can sign up for here.