Filed Your Company Tax Return? Now Put It to Work

Congratulations! Your tax return is lodged, the numbers finalised, and the last financial year is officially closed.

While a lot of business owners file it away and move on, there’s a lot of useful information in those numbers that could help you make better decisions in the year ahead. This article shows you how.

A tax return is a record of the past. It tells you what you earned, spent, and owed. What it doesn't do is tell you whether your margins are healthy, whether your pricing is keeping pace with your costs, or whether the decisions you made last year are ones worth repeating.

And that is a conversation you should have while everything is still fresh.

Is your profit moving in the right direction?

Knowing what your profit was is a good start. Next, we want to compare it with the previous year. Is it growing, shrinking, or holding steady? And if it's changed, do you know why?

A profit compared to the previous year, and set against your revenue and cost movements, starts to tell a story. If revenue grew but profit didn't, it could mean costs are rising faster than income, which is worth knowing before you set new targets.

Where have costs moved?

You probably have a general sense of your major expenses, but having a clear picture of how those costs have shifted over time can give your business an edge.

Going through last year's figures line by line and comparing them to the year before often surfaces things that weren't obvious in the day-to-day running of the business. For example, supplier costs that have slowly crept up, software subscriptions that have doubled, a labour cost that's grown faster than revenue. These things aren’t necessarily problems, but it’s helpful information to have when planning for the next year.

If you haven't reviewed your cost base recently, our article on readjusting your business model to meet cost increases covers the key areas worth examining.

How was your cash flow?

One of the most common sources of confusion for business owners is the gap between profit and cash. A business can be profitable on paper and still feel cash-strapped, and if that sounds familiar, last year's numbers can help explain why.

Look at the timing of income and expenses, how quickly clients are paying, and where cash is tied up. These things will give you a much clearer picture of how to manage cash flow going forward. If cash was consistently tight at certain points last year, that pattern is likely to repeat unless something changes.

Use last year to set better targets this year

When you know what last year’s numbers are telling you, you're in a much stronger position to set realistic and meaningful targets for the new financial year.

• What gross margin do you need to maintain for the business to be sustainable?

• What revenue do you need to cover your costs and pay yourself properly?

• If wages or input costs have increased, does your pricing still hold up, or does it require some adjustments?

These are the questions that turn a tax return into a planning tool. And they're much easier to answer when someone who understands your business is looking at the numbers alongside you.

How we help

At Accounting Heart, this is a valuable conversation we have with business owner clients. We take last year's results and use them as the starting point for a practical discussion about what the numbers mean, where the pressure points are, and what decisions make sense for the year ahead.

The tax return shows what happened, and business advisory helps you decide what to do next.

If you'd like to have that conversation, we'd welcome it. Book a discovery call.

Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and/or other advice as may be appropriate having regard to their particular circumstances.