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Business Finance 101 – Year End Business Planning – Checklist – Preparing for a great Year End!

images/Business Financials2.jpgYear-end business planning is part of the on-going plan of running a business – you need to keep reviewing the plan, and preparing for year-end early is the way to have a great finish! So here are the key areas to work on – do 1-2 a week to be ready by 30 June.

1. Accounts in Order

Ensure your accounting is up to date as much as possible – with modern software moving into the cloud, and bank feeds streaming the data for easy rules to be set up to speed up data allocation, the task is less a burden each year! If you have questions, call me for FREE discussion – 0407 361 596!

2. Where are you at?

Print the Profit and Loss and Balance Sheet – read them! Not sure how they work? See our explanation Profit and Loss and Balance Sheet.

Are cost of sales in proportion to sales – if you sell product – work out the margin – what margin is typical of YOUR industry?

Is there a profit? If not – are expenses too high?

Are sales declining/struggling? If there IS profit, but cash is tight – are trade debtors (accounts receivable, clients who own you) climbing – look on your Balance Sheet? Not sure?

3. Review Financial Plan and Goals

  • Did you meet sales goals? Is it clear why? What can you do to improve?
  • Did you improve profit?
  • Did you lower expenses?

4. Tax plan

Too much profit? This could mean more tax. If you are selling, a good profit is essential to be attractive to a buyer.

But if not selling – maybe some expenses can be made in June – stationary, stock, pay superannuation early instead of in July – ask your accountant or us for tips.

Note – be careful – high-cost purchases such as equipment, vehicles or furniture will NOT always be expensed and reduce your profit – they may end up on your assets on the Balance Sheet – unless the $20,000 upper limit on asset write off is still available (it has been extended for another year to June 2019).

5. Owner / Director Results

Determine the consequences to you the owner or partner (or Director if you have a company). What is the benefit to you? A director’s bonus (can reduce profit and company tax). Are you getting the return you wanted form your own business? Who can you seek for a review and advice – your accountant, business advisor, successful business associate/friend?

6. Review Business Plan

What parts of your plan need more attention – there are 5 Core Functions every Business must perform – Leadership, Employee/Team, Finances, Operations, Marketing & Sales – what are is weak – no-one has it all working perfectly (even big business!) – and one area may get neglected while you focus on improving another – the key is starting to delegate regular processes to part-time virtual or in-house assistants, so you can ramp up Marketing & Sales to propel the business – otherwise who will? It’s not just about a good advert – it’s the whole plan and strategy – keep improving and find what works and sells!

Year-end business planning is an on-going plan when running a business – you need to keep reviewing the plan, and preparing for year-end early is the way to have a great finish! So to work on – do 1-2 a week to be ready by 30 June – action gets results!

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!

Or ask a question

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 0407 361 596 Australia

Business Financials – What does Equity mean?

images/Business Financials.JPGI am asked – what does equity mean?

If we deduct Liabilities from the Assets of the Business (at cost value), we are left with Equity. These are all listed in the Balance Sheet financial statement.

Here is the formula -

ASSETS – LIABILITIES = EQUITY

Equity is also sometimes used to refer to as ownership of shares in a company.

In a company Balance Sheet it is the amount of money contributed by the owners/share/stock-holders PLUS the Retained Earnings (Profit/Loss of past years).

Also note - because assets like plant and equipment are entered at their COST amount (less GST) the MARKET value of the asset is not represented, unless an adjustment is made (by journal) to reflect change of value (and increase or decrease of asset value are then balanced in a special sale or cost of sale asset account). Hence the Company Market Value may not be the true Market Value, unless the adjustment has been made.

Equity can be called Owner’s Equity – for Sole Proprietors, or Shareholder/Stockholder Equity for a company (usually with more than one director).

Owner’s Equity may consist of several accounts –

1.     Capital

2.     Drawings and

3.     Current Year Net Income/Earnings

Shareholder Equity may consist of accounts such as –

1.   Paid-In Capital

a.     Preferred Stock

b.     Common Stock

c.     Paid-In Capital in Excess of Par Value

d.     Treasury Stock (stock re-purchased from shareholders)

2.   Retained Earnings/Net Income 

3.   Less Treasury Stock

Equity is also used in several important ratios that help determine financial health of the business, such as Debt to Equity and Return on Equity.

Need help? Not sure?

Call for FREE 30min advice / strategy session today! 0407 361 596

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes”

There’s 18 that the Tax Office see regularly – Get them right!

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Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
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