End of FY panic? Why it should be easy

If you’re scrounging for ways to ease the tax burden as the financial year end fast approaches, then you’ve been doing it wrong all year, says M2 Corporate Director Mace Turco.

For his accounting firm’s clients, it’s not about sprinting to the end then painful prepping for the accountant and tax office, it’s about having your processes and systems right all along.

He uses a sporting analogy – your accounting software is the scoreboard and M2 is the scorekeeper, which is fitting given his father and M2 Managing Director Mario Turco had a successful AFL career including three years with North Melbourne Football club in the early 1980s.

“That way if we get the scoreboard working i.e. your financial system and reporting, it allows us to be advisors and look at tax issues, cash flow, budgets and forecasting, how do we minimise tax, what can we do better, how can we solve other issues in your business,” he says.

“If it’s painful, then all you should be doing now is seeing your advisor prior to the end of the financial year and having an open-ended conversation around what software and systems can be put in place to reduce the burden of pulling together the various reconciliations and documents required for the accountant and making sure the information is compliant with tax office requirements.”

In this modern era of accounting software, a business should not be submitting a spreadsheet 10 months after the financial year ends to meet the May 15 ATO final lodgement deadline, Turco says.

“Even then, how accurate is it because it’s through a spreadsheet? It might be through accounting software but the client might be processing it incorrectly because they are doing it internally and haven’t had professional advice on it for close to 12 months,” he says.

“You need to get a true indication of your numbers to fully understand the current state of your business and what the future looks like.”

With the right scoreboard a business can identify a problem and ‘nip it in the bud’ early.

“So if something unforeseen happens like a change in the price of your stock or a competitor enters the market, being able to understand what that can do to your business and how you are going to overcome that – if you don’t have the right procedures and processes in place and the right reporting, quite often you will find out when it is too late.”

He says the financial part is easy, given the right system. Rather than a last minute dash to the finish line, businesses should be already finishing off their tax plan, looking at what they have achieved this year, what their estimated tax liability is going to be from their business and how are they going to tackle that.”

“In businesses with a small number of key people, the time and effort they have typically goes into generating revenue and driving the business, so the processes and internal functions tend to fall away or be the least important thing, which is actually what speeds up and helps your business reporting and ultimately your compliance with the tax office.”

Turco, whose core client base is mostly two to four directors and up to 20 staff, says as the financial year draws to a close, there is vastly different sentiment across industries.

“Retail businesses such as those in hospitality are feeling the pinch a bit and acknowledging they have to try new things to be competitive and attract customers to their venues.” he says.

“Construction industry clients are talking about things picking up and they are feeling an uplift in terms of spending and projects that are coming out.”

He says finance brokers are still feeling the fallout from the banking royal commission while other services businesses, such as consulting and physiotherapy, are steady because they are not subject to too much volatility of the market or economic climate.

“We have some clients who do export products and with the currency change, the export market is becoming more appealing because everything in Australia has become cheaper, so a bit more of an uplift in their sales because of favourable exchange rates.”

► M2 Corporate is a new CCIWA Member. Find out about membership packages here

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