Five things every business owner needs to do before the end of the financial year

Easy Weddings
Updated on: June 26, 2015

wedding business tax preparation

Owning your own business certainly has its perks, but with them comes great financial responsibility, including BAS reporting and getting the rest of your financial affairs in order before the EOFY (end of financial year). While you should always seek advice from a qualified professional, here are some basic tips for things you should get done given the June 30 EOFY deadline is only a matter of days away, So, grab a calculator and a coffee and let’s get down to business:

1. Gather compliance records

The ideal tax accountant is not someone who mysteriously delivers a favourable return each year, putting you at risk in the event of an audit; it’s a qualified agent who is able to extract the right information from you to legitimately make the most of your return but it’s your responsibility to provide evidence.

When preparing your return – either independently or with the help of a professional number-cruncher – here’s a list of the compliance records you’re likely to need:

  • Stocktake stats: if your business turnover exceeds $2million, OR the difference between stock at the beginning and end of the year exceeds $5,000, you may need to conduct a stocktake, which will assist in preparing your profit & loss statement.
  • Profit & loss statement: all sales & expenses should be recorded in a profit & loss statement, where entries can be recorded as monthly, quarterly or annual transactions – be consistent.
  • Debtors & creditors report: details of exactly which customers still owe you money, and any suppliers or services for which you’ve been invoiced but are yet to finalise payments. Unless your business operates on cash alone, you’ll need to generate a list of all these unprocessed invoices sent and received during the 2014/2015 tax year, as they are still considered income or expense for this period.
  • Capital gains information: if you’ve purchased assets such as property, land or shares, invested money on adding to/improving physical assets, or lost money from a capital investment, the Australian Taxation Office (ATO) would like to know the nitty-gritty.
  • Employee records: if you employ staff, payment summaries and details relating to their superannuation will be needed to lodge your return.

2. Prepare particulars

If you’ve set aside time in your busy schedule to visit a tax accountant, be prepared with all the information needed for them to lodge your return in a timely manner. In addition to the above compliance records, you’ll also need the following information, as it applies to your business:

  • Australian Business Number (ABN) and/or Tax File Number (TFN)
  • Bank statements including interest earned and the nature of each deposit
  • Bank details in case of a refund (BSB and account number)
  • Insurance provider details
  • Rental statements including income earned and expenses incurred
  • Details of any subsidies or grants received
  • Proof of charitable donations $2 or more to registered charities
  • Motor vehicle log books and travel expenses

For a comprehensive list, see Mas Accountants’ 2015 Company, Trust or Partnership Tax Return Checklist.

3. Select an accountant

If you’ve recently moved or aren’t 100% happy with your old accountant, it’s time to find a new one. Google tax agents close to your home or business, or ask your friends, family or legal advisor for a referral to spare you the annual trial and error of finding a professional tax accountant you can work with every EOFY – and throughout the year – who understands you, your business needs, and the industry inside out. Make sure the accountant you ultimately decide on is registered with the Tax Practitioners Board (TPB), as there’s zero protection for taxpayers who enlist the services of an unregistered tax or Business Activity Statement (BAS) agent.

4. Make an appointment

Pick up the phone and make an appointment today (for next week if you have to) to avoid procrastination, along with any fines that may apply to late lodgements. It’s important to get the ball rolling early, especially if you’re anticipating a return – the sooner you receive it, the sooner it can be used to reduce interest on outstanding debts, reinvested into marketing, advertising or business development, or even used to take that much needed break you’ve been waiting for!

5.  Get tax savvy

Regardless of whether you’re lodging your own tax return online or having it prepared by a registered tax accountant, it pays to do some basic research into current tax laws, exemptions and rebates. On June 15 this year, the Australian Government passed legislation changes to asset deductions for small businesses, officially giving them access to a $20,000 tax write-off to purchase items relating to their business. As reports, the $20,000 tax deduction commenced on May 12, 2015 and runs until June 30, 2017, after which time it will return to the original $1000 threshold… So, if you’ve been eyeing off a new delivery van, now may be the time but always remember that before you make any such decisions, check the rules with your accountant or a qualified professional because we’re pretty sure a quick Google search around the current rules won’t cut it as a reference with the ATO!

Finally, some EOFY key dates…

  • June 30: deadline for issuing employee payment summaries
  • July 21: if you pay payroll tax or lodge monthly BAS, your June BAS is due, and if you’re registered for payroll tax, your annual reconciliation needs to have been lodged.
  • July 28: unless you have used a registered tax or BAS accountant, quarterly BAS is due. For those using accountants, you’ve scored an additional four weeks to lodge and pay.
  • August 14: deadline for lodging your payment summaries and overall summary to the ATO.

As micro business community Flying Solo puts it, “the size of your tax deductions is directly related to your ability to know and track all your expenses.” If your business has poor recording and compliance procedures, your tax return is going to reflect this. To make sure you’re accurately recording and claiming all your expenses in preparation for next year, investigate Free Accounting Software options, or look at more comprehensive small business accounting software like Xero, MYOB or QuickBooks to make next year’s EOFY tax return a much less taxing, and more financially rewarding process!

Tags / Categories

Categories: Share Worthy Articles