How to prepare your home construction business for 2024-25

Reset time

As we head into the new financial year, it is a perfect time to review, reflect and reset the financial foundations of your business. In this article, we will discuss who could be on your financial team to help you with important financial decisions on your business journey.

Your Bookkeeper

Your bookkeeper, whether they area internal or an external contractor, is required to provide you and your management team with clear and current accounting to help you review the past and prepare for the future. Ensure that your bookkeeper understands the importance of:

• accurate monthly financials by at least the middle of the following month, if not before
• data entry of income and expenses at least weekly
• preparing future cash flow forecasts
• lodgement dates and lodging PAYG and BAS
• payroll and superannuation payments
• clear communication and reporting of tax obligations

Your Accountant

Ensure that your accountant is aligned with your business goals and you set the expectations of the relationship. Your are investing in a service, and this time of year is the opportunity to review whether you are receiving what you expect.

Your bookkeeper and accountant should have a clear line of communication, with the bookkeeper providing your accountant with accurate and current reporting.

A great accountant will also conduct a review of your financials and do some basic calculations on liquidity, solvency, profitability and return on investment – and explain this to you in a way that you can confidently understand.

Your accountant is the go-to for all tax reduction opportunities, as well as providing guidance on the timing of end-of-financial-year purchase/payment options.

For construction pros, it’s also important that your financial records synch with your day-to-day business software. Talk to your accountant to see what kind of accounting software, like Xero for construction or Quickbooks, can work with your construction business software.

Your Financial Advisor

A quality financial advisor can assist your small business with earning the correct margin using project management software, investing your profits wisely and helping you create a financially independent future. You many want to get a holistic financial plan of your personal situation and get specific advice (maximizing your retirement planning, protecting your family with insurance, estate planning, etc.)

They also can help you maximize the use of your profits with external investment opportunities outside your business. MoneySmart can help you find a recommended independent financial advisor.

We suggest interviewing 2-3 advisors and selecting the one you feel most comfortable. Some important questions to ask include:

• What are the main types of clients you deal? (the best answer is people in your situation)
• How do you charge for your advice? (you want a fully transparent schedule or process)
• Ask them about their own personal portfolio

The most sought financial advisors hold an educational approach, taking time to explain and ensure all parties understand matters without the jargon, as well as asking lots of questions, and speaking equally to the queries of all partners.

Remember, no one cares more about your company or your money than YOU.

Your Finance Broker/Banker

Your business may need finance to fund ongoing operations and growth. Finance can be provided from debt, equity and internally generated cash flow. It may also be an idea to set up a line of credit or overdraft when your business doesn’t need it, to cover business contingencies, including taking advantage of new opportunities.

Review all your current loans, particularly large ones such as your home loan. Higher interest rates are still persisting and while your interest rate is important, there are a number of other factors that can affect the total cost of your loan. Hidden fees, inefficient loan structures and lenders not experienced in trade/construction finance can all add costs, so start with these to take a holistic view of all your loans and assess them accurately.