The EOFY is an extremely hectic time for businesses. It’s no easy feat to set your financial records in order and get them ready by the end date of the financial year.
As a small business owner, the mountain of paperwork can easily bury you under overwhelming pressure. On top of this, you’ll also have to face the stress of running your business daily.
To manage the long list of tasks that are coming your way, it pays to know how you can prepare for EOFY.
6 Ways to Get Your Small Business Ready for the EOFY
Organise your financial records
Bookkeeping should be your priority even months prior to the end of the financial year. You must have a complete record of all financial transactions from July 1st of the previous year to June 30th of the next year.
Be sure to file and update the documents needed to streamline the process. It’s also a life-saving hack to keep digital copies as backups to your manual records.
Here are some of the documents that you need to prepare before the financial year ends:
- Profit and loss statement summary
- Summary record of debtors and creditors
- Record of assets
- Yearly reports or returns for pay as you go (PAYG) withholding, fringe benefits tax (FBT), and goods and services tax (GST)
- Superannuation requirements
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Pin key dates
Avoid Australian Taxation Office (ATO) penalties and late charges by taking note of the important dates of all financial year activities.
A good old calendar of reminders can do the trick. The key dates should already be posted on your schedule as early as the start of the financial year, so you don’t miss anything.
Check out this year’s important financial dates here.
Check out tax deduction claims
Most expenditures that directly relate to your assessable income are tax deductible. An assessable income is the earnings you receive from doing business. Generally, you can claim deductions from your operating expenses in the same fiscal year or from the depreciation of your capital assets over some time.
ATO has three golden rules when it comes to claiming business tax deductions:
- The expenses should be business-related and not for personal use.
- If the expenses serve both business and personal purposes, you can only claim the portion that relates to business use. For example, you bought an oven that you mainly use for business. However, you personally use the equipment on weekends as well. With this, you can only claim an estimated 70% of the asset’s full price.
- You should have the necessary records as proof.
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Go over your tax write-offs
To offset the impact of the pandemic on businesses, the ATO raised the threshold for tax write-offs from $30,000 to $150,000. This applies to new and second-hand assets for businesses with less than $500 million turnover.
If you’re eligible for this, you can immediately claim instant write-offs for assets purchased or used this financial year. This is the best time to invest in new assets to scale your business. You’ll be able to upgrade with new equipment, business tools and online solutions and claim a deduction on your tax bill at the same time.
Consider getting a tax consultant
A tax consultant can help you sort out a long list of to-dos. They’ll remind you of crucial deadlines and inform you of tax law amendments that may affect or benefit your business. They’ll also go over your documents to help analyse your cash flow, tax offsets, and other crucial matters.
Overall, they won’t only assist you in successfully concluding the process but they’re also your go-to tax support throughout the year.
Beware of fraudsters by ensuring that you’re dealing with an agent who’s registered with the Tax Practitioners Board (TBP). When looking for a tax consultant, look for the tax practitioner symbol on their website or business cards that shows their type of registration and individual registration number. You can use these details to check your agent’s validity on the TBP Public Register.
Strategise for the next year
While the main theme at the end of the financial year is fulfilling your tax responsibilities, the numbers on your financial statement also indicate the status of your business.
Take this as an opportunity to examine how you’ve been doing so far. Were you able to hit significant marks? Did you have a positive cash flow? What areas did you fall short of? These are just some questions that you’ll find answers to when you take the time to go through your accounts.
Use this data to help you strategise and make better decisions for the next financial year. You’ll be able to set new sales targets, establish marketing goals based on demand changes, implement financial adjustments, and plan ways to manage your cash flow more efficiently.
All Set for EOFY?
The EOFY may be an overwhelming time for you but this can also be the most insightful. This might be the only time that you’ll take the keenest look at your finances and make better decisions for your business. It’s also a great feat that your business has surpassed another year!
Here are smart tips to help you fulfil the mounting paperwork that comes with the process. This also helps you follow through with the necessary steps smoothly and not miss out on anything that might cause delays and inconveniences. While you’re at it, you might want to check out EOFY promos that you can leverage this season.