When the end of the financial year approaches, you need to evaluate your business’s financial health. A mid-year financial check-up ensures that your business books are up to date, your budget is on track, and you are prepared for tax season. If you don’t review your financial records, you can put yourself into a risky situation. In this blog post, we’ll discuss the significance of mid-year financial checkups and what areas you need to review.
Why is a Mid-Year Financial Checkup Essential?
Many business owners sort out their business finances during tax season. This can lead to various problems, such as wrong tax return lodgment due to inaccurate financial records, and you may have to pay penalties for wrong tax return lodgment. Your bookkeeper and tax accountant must work together to get the job done in the right way. To ensure accuracy in your business books and taxes, you can consider searching online for ‘bookkeeper and small business accountant near me’. A mid-year financial check-up offers various benefits:
- Identify and resolve mistakes: With mid-year financial checkups, you can easily identify and resolve errors or check your business books before any problem arises.
- Strategic financial planning: Check your financial position and adjust your goals or budget for the rest of the year.
- Compliance: Make sure you are meeting tax and legal requirements, avoiding surprises or penalties.
- Cash flow management: To maintain smooth business operations and plan for future expenses, you need to understand your cash flow.
By conducting a mid-year financial check-up, you can avoid the last-minute stress of financial cleanups.
What Areas Should You Review During Your Financial Checkup?
Check your business income and expenses
Make sure to review your profit and loss statement, also called the income statement. This will show your business income and expenses for the year so far. You must ask questions:
- Does your business meet your income goals?
- Are there areas where you are spending too much?
- Do you have any unclassified or untracked financial transactions?
Actions you need to perform:
- Review your business income and expenses to know where your money is going and coming from. Bookkeeping in Melbourne is the right option to stay informed about the cash flow of a company.
- Spot unexpected charges or irregularities.
- Address cost-cutting opportunities to enhance profitability.
Reconcile credit card and bank statements
Account reconciliation ensures that your financial records align with your bank and credit card statements. Any discrepancies could point to fraud, errors, or missed financial transactions. You can also get help from a bookkeeper to reconcile your income and expense accounts. Here are some actions that you need to take:
- Check if the records in your business books align with your bank and credit card statements.
- Check and resolve errors.
Tools like Xero or MYOB can make reconciliation faster and more accurate. If you don’t know how to use these tools, make sure to seek help from professionals.
Update accounts receivable and payable
Unpaid invoices and outstanding bills can strain your cash flow. Conducting a mid-year review of these accounts helps ensure you’re collecting what you’re owed and staying current with your supplier payments.
Accounts Receivable
- Follow up on past-due invoices.
- Consider offering payment plans or early-payment discounts.
- Write off uncollectible debts when recovery is unlikely.
Accounts Payable
- Confirm all supplier invoices have been properly recorded.
- Pay any overdue bills to maintain strong vendor relationships and avoid late fees.
Review your tax obligations
Checking your tax obligations can save you from scrambling at year-end. The top accounting firm Melbourne uses this time to check your tax strategy and ensure compliance. Here are important tasks that need to be done:
- Confirm that estimated and actual tax payments are up to date and accurate.
- Organise tax-deductible business expenses with complete documentation.
- Get in touch with an accountant to discuss your tax-saving strategies.
Conclusion
After completing your mid-year financial check-up, take proactive actions to resolve the errors you have identified. You can also engage Reliable Melbourne Accountants to help you conduct a year-end financial check-up.