“In this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin

Dealing with taxes is a fact of life for all of us including small business owners.  Individuals and companies are required to pay taxes on income/profits made over a 12 month period.  The End of Financial Year (EOFY), 30^th of June, marks the end of the tax year for individuals and quite often the end of the reporting period for organisations.

In Financial Year 2014-15, taxation revenue represented a whopping 27.7% of GDP[1].  A total of $445,965 million[2] was collected for all levels of government of which income taxes levied on individuals represented 41.1% of total taxation revenue, income taxes levied on enterprises represented 16.5% and GST revenue represented 12.7% of total taxation.

Individuals and companies are required by law to report on income within four months after the EOFY, that is, before the 31^st of October.  The EOFY can be a very busy time for small businesses as they try to complete a number of activities in preparation for reporting yearend statements.

Once the financial records for the year have been accurately recorded, verified and finalised, reports can be generated to evaluate the performance of your business.  These reports are of interest to not only the managers and shareholders but also investors, lenders and creditors.

Information within these reports identifies the liquidity, profitability, operational efficiency and growth potential of your business.  For example, they identify poor performance of services/products that have little or no gross profit; they clarify if you are paying down your debt; they reveal growing cash reserves and show if you are investing in the business growth.

Thus, compliance reporting which is often seen as just another facet of doing business can be a blessing in disguise as it forces small businesses to review their financial records and their financial situation.

Once you know the source of the success/problems you can take the appropriate action to chart the future direction of the business.

[1] The GDP (Gross Domestic Product) is an indicator of the health of a country’s economy.  It represents the total dollar value of all goods and services produced over a specific time period.

[2] Australian Bureau of Statistics – Taxation Revenue, Australia, 2014-15.