9 Questions You Should Ask Your Advisor Before The Year End
If you’re anything like me, each year as tax time rolls around, you find
yourself with several ‘quick questions’ for your accountants and tax
advisors. Naturally, they tend to range in complexity and, as a result, so too
does the amount of time it takes to quickly respond. However, this
is also when many of us rely the most on our advisors, and how they respond is
a chance to reinforce trust and value within those relationships.
As advisors, understanding the questions they’re likely to come across –
before they’re asked – helps in preparing personalised answers with the
right information. It also saves them inboxes (and mental capacity) from
becoming overloaded. Its important for you to feel confidence in your advisors
and build a long lasting relationship with them. With the help of my peers,
I’ve compiled 9 questions that you should ask your advisors in the coming
months. While this list offers advice, only you know what’s best for your
business – simply take from it what you need to do what you do best.
1. “How is this end of financial year
(EOFY) different from the last?”
In contrast to last year, do you have a clearer understanding of
COVID-19’s financial impact? Can assess how the pandemic has affected a
business overall? When communicating this to advisors, ask them to explain the
business numbers after striping back the ‘COVID-numbers’ – or taxable
government benefits, like JobKeeper – to establish how well you’re doing
without inflated support.
2. “What will you be looking out for
when reviewing my business’ numbers?”
Ensure that they are looking for outliers. As well as pandemic grants
and funding, these could also include the costs associated with business
transformation. From a tax perspective, communicate early on whether these are
deductible expenses.
3. “How will JobKeeper impact me this
EOFY?”
JobKeeper inflates wage expenses, meaning you’ll need to narrow
down how much a business’ employees cost without any subsidies in the new
financial year. As JobKeeper is a taxable income – EOFY is a chance to get
on the front foot of this conversation.
4. “I feel like my business isn’t
doing well, can you help me?”
A lot of us are entering the EOFY with a lot of emotion. After all, it’s
been a chaotic twelve months. However, its important to ensure that your
advisors bring facts, numbers and truth to those feelings of doubt or
uncertainty, and to communicate them.
5. “How can I pay less tax?”
To offer some perspective, first ask yourself the a simple equation;
will you spend $4 to save $1 of tax, you’re still $3 out of pocket. Will that
tax deduction support your business’ performance? If the answer’s “no”, Its
wise to spend more to ‘save’ on tax. Ensure your advisor is on the same
page as well.
6. “Help, I’m not sure if my business
is set up properly?”
EOFY is a great opportunity to re-evaluate your business’ structure from
both a tax and risk perspective. It’s also a chance to educate yourself on what
category your business’ structure falls under, its important to feel confident
in how you’re set-up. If you are not confident with your current structure
ensure you raise this with your advisors this EOFY.
7. “How can I make my business more
efficient in FY22?”
This question always comes back to; how can I improve my processes with
technology? EOFY is the perfect time to introduce new digital tools –
especially if you’re transitioning to a new accounting software – and learn the
skills you need to operate more efficiently. Consider getting your
advisors to set you a ‘homework’ for FY22. There are plenty of easy-to-navigate
courses available on Xero Central that range in skill level and
expertise.
8. “What do I do with my cash on
hand? And, can I take my cash out of the bank?”
This is an important question especially if you plan to borrow from a
bank within the next year. You need to ask your advisors on your maximum
borrowing capacity and minimum tax exposure, finding consistency between the
two.
When it comes to withdrawing cash, make sure your advisor understand the
tax implications involved.
9. “How can I prepare my business for
the financial year ahead?”
This EOFY isn’t just about tying up FY21; it’s also a chance to prepare
for the year ahead. Before you go for advice, be proactive by having a plan for
your business in the next twelve months. By tax time, this means that they can
have suggestions ready to help you get to where you want to be.
Whether it’s answering a ‘quick question’, or unpacking a complex
business plan – how we communicate with our advisors is all about building
trust. Behind each and every question is a small business owner who is striving
to grow, and if we your advisors can reciprocate that with considered
responses, you’re on our way to building lasting relationships.
If you are looking for advise for your business ask our team to connect
you with someone in our advisory team.
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