With the financial year drawing to a close, it’s time to start preparing your accounts and looking forward to the new financial year. Even when you have support from an accountant, it’s good practice to understand what’s required of you, so there are no surprises come July. This handy step-by-step EOFY checklist will help ensure you’re compliant and prepared for the end of financial year.
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A handy EOFY checklist for small business owners
1. Get your finances in order
First, make sure your financial records are organised. Use your balance sheet and your profit and loss to reconcile your accounts receivable, accounts payable, bank accounts and loans. Check that your goods and services tax (GST) and pay as you go (PAYG) withholding accounts are up to date and prepare Payment Summaries to send to your employees by 14 July. Ensure your own and your employee super contributions are up to date and your financial records comply with Australian law.
2. Prepare your statements
It’s mandatory for you to complete and lodge your income tax return and, if your business is registered for GST, your business activity statement (BAS). Your BAS enables you to pay your GST, PAYG instalments, PAYG withholding tax and fringe benefits tax (FBT) among others. If you use a cloud-based accounting tool, like QuickBooks Online, you can generate reports to help you complete these quickly.
3. Stocktake inventory, review assets and prepare expense reports
Complete a stocktake of inventory and plant, equipment or fixed assets. Recording assets you’ve purchased and any money spent on improving assets throughout the year will help you calculate your eligible depreciation credits. Make sure all your business expenses are logged too, so you can maximise your tax refund.
4. Find out which tax deductions you can claim
It’s important to set aside time to review which tax deductions apply to you, particularly deductions that are often overlooked. You can claim credits on expenses for vehicles, travel, clothes and stationery in the year you incur them, and capital expenses such as machinery and equipment over a longer period. If you want to make a claim, you’ll need to provide paper or electronic records of the expense and prove it was for business purposes.
5. Lodge your income tax return and BAS
How and when you need to lodge your income tax return depends on your type of business, but it’s usually completed online by 31 October (reporting on the previous financial year). If you have to lodge a BAS, you can choose to do it monthly or quarterly, either online, by phone, by mail or through your registered tax agent.
6. Understand any tax changes and update your software
There may be changes to the tax law which significantly impact your business, so it pays to understand how you will be affected in the new financial year. Here are a couple of important changes you should be aware of:
- Single Touch Payroll will make it easier for you to report salary, wages, PAYG withholding and super contributions with every pay run. If your business has more than 20 employees, this will be mandatory from 1 July 2018.
- Simpler BAS will simplify your GST reporting requirements. This will take effect from 1 July 2017, so make sure your accounting software is compliant before then.
7. Check your financial position
Your balance sheet, income statement and cashflow statement can tell you if you met your financial targets in the previous year. They can also help you set new performance goals for the year ahead and create a cashflow forecast. If your results aren’t what you’d hoped for, think about what you can do to boost your cashflow.
8. Plan
Take the time to reflect on your business, focusing on goals and priorities. Assess strategies that are working and those that aren’t. If your business is predicted to grow in the next year, double-check your compliance and tax obligations, so you’re prepared.
9. Check you are covered
If your circumstances have changed in the last year, check you still have the right insurance. The insurance required will depend on your type of business, its structure, size and the industry it belongs to. Most small businesses take out insurance that covers their company, income and commercial risk. There are also compulsory insurances for some businesses, like workers’ compensation, third-party personal injury and public liability.
Consult a professional tax advisor if you need support. Or if you’re taking it on yourself, find out how accounting software can help you stay on top of your business finances all year.
To read more articles related to Small Business Tax, visit here.
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