This is a guest post by accountant Daniel Hardy of Xero Platinum Partner firm Caveo Partners. Recently, Caveo Partners was named the best boutique firm of the year at the Australian Accounting Awards.
With a new financial year upon us, you might be thinking, what’s next for my small business? In fact, you’ll likely have all kinds of thoughts about where you’re at and where you’re headed next. The best person to help you work through it all? Your accountant or bookkeeper.
Earlier this month, Caveo Partners took to Xero’s social channels to ask small business owners which questions they wanted answered come tax season. We found that many of you are keen to understand how we – as advisors – can help you set up for a strong FY23. Below, you’ll find our responses to your top queries – all to help you nail the months (and year) ahead.
1. How often should I see my advisor at tax time?
To clearly understand how your business is performing, you need to be having regular conversations with your advisor – and not just at tax time. At a minimum, I’d recommend connecting with an accountant or bookkeeper at least four times a year (or every quarter of the financial year). If you’re only seeing them once in a blue moon, it’s unlikely you’re getting the most out of the relationship. So instead of ticking the tax and compliance boxes come June and July, sit down together to create a strategy for FY23, and map out a regular cadence to help you implement your plan of attack.
2. Do I need an accountant and a bookkeeper, or just one of the two?
No matter how small your operation, engaging an accountant is a valuable and wise investment. Why? Because running a business is complex, and without the guidance of a qualified professional, things like tax, payroll and compliance could land you in hot water. A bookkeeper plays an essential role here by providing up-to-date and accurate financial information about your business. Together with your accountant, they’ll offer a complete overview of your numbers to inform budgets, cash flow forecasts and any outliers that might act as roadblocks to your goals.
However, depending on the size and complexity of a business, some solo operators (like freelancers, for example) feel confident enough to do their own bookkeeping. While this works for some, it often becomes harder and harder to manage as a business grows. So, it’s always worth weighing up whether investing in a bookkeeper will save you time (and ultimately, money and sanity) in the long run.
3. How do I know if I’ll end with a tax bill or a tax refund?
Before 30 June, it’s a good idea to get in touch with your advisor to start tax planning. This is the best way to understand whether you’ll receive a refund or a bill from the ATO, and what options you have in terms of minimising or fronting your tax to pay. Although the deadline has passed for FY22, be sure to make a note to remind yourself about this in the financial year ahead – preferably around May.
4. Is a financial planner the same as an accountant?
It’s a common misconception that financial planners and accountants do the same job. However, they’re very different roles in practice. A financial planner can help you with retirement planning, managing investments, personal risk protection and all-round financial advice. On the other hand, an accountant is typically more specialised in business finances, like tax commitments, reporting, budgeting, and general business guidance.
5. Beyond tax time, what value can an advisor add to my business?
Good question. Beyond tax planning and closing out the current financial year, an advisor can add massive value to your business by helping you create and implement a game plan for the next 12 months and beyond, from forecasting to setting financial goals (and everything in between).
Beyond the numbers, many advisors offer expanded services, such as digitalisation support and talent attraction and retention strategies. So, the next time you meet, be sure to ask about their wider offerings to get the most out of your time together.
The new financial year is your opportunity for a fresh start. Over the next few days or weeks, I encourage you to think about how you’ll embrace this next chapter to the fullest. Because – with the right support – FY23 is yours to conquer.
Daniel Hardy of Xero Platinum Partner firm Caveo Partners.