Tax season can be a stressful time for any small business owner. With deadlines looming and paperwork piling up, it can be easy to feel overwhelmed and miss important tasks. But fear not, my EOFY (End of Financial Year) checklist for small business owners will ensure that you don’t miss anything important. From tax planning, to reconciling bank statements, we’ve got you covered. Preparation is key for EOFY – especially if you want to avoid penalties!
Tax Planning Ahead of 30th June
Your tax return will only be as accurate as your financial records. And believe me, you want them to be spot-on to take advantage of tax deductions. Take time to review your records, ensuring you have all receipts (invoices) before you meet with your tax advisor. By doing this ahead of time, you can avoid the last-minute rush.
Our poddy episode What Happens When You Don’t Keep Accurate Records, gives you some the inside info and handy tips!
Pay Employees in the Correct Financial Year
It’s really important to pay your employees – same as you would normally, don’t miss any or pay them late into July. Because the day you physically pay them (the money leaving your bank) determines which financial year the income applies to, the dates they actually worked don’t play into it.
Let’s break it down. So if you would normally pay your employees on Monday 3 July, don’t bring it forward and pay them on Friday 30 June because you’re a little flush with cash, or you think you could do with the extra expenses in the financial year – without doing your research. Because if you already pay them weekly, you might bump them into a higher tax bracket than they need to be, amongst other complications.
On the flip side, if you would normally pay them Friday 30th, don’t push it out to July, else it becomes their taxable income in the new financial year. Also meaning the new higher super rates apply. Because yup, you guessed it – the super rate applicable is also based on the date you pay their wages, and not the date they worked. And with the super rate changing each financial year for the next few years, this can become a bit sticky.
Failing to make these payments on time can lead to taxation issues and other complications down the line.
EOFY stocktakes are essential and unfortunately, can take a lot of time. Run an inventory report and review your stock levels against your digital records. It’s important to ensure that any damaged or obsolete stock is accounted for and that your records are spot on. Do this on or as close to 30 June as you can 👍
Your trusty bookkeeper and tax agent will need this figure to know your stock on hand (unsold) at EOFY for tax calculations.
Pay Super Before EOFY If You Want to Claim
If you’d like to claim FY 22/23’s super as a business expense, you’ll need to pay it well before 30th June (so it reaches the fund in time). Review your quarterly super payments to make sure they have all been paid on time for the correct amount using the right methods. This will save you from racking up penalties for late payments and also make sure it’s tax deductible – as it’s only a tax deduction in the year that you pay it. If you need help to find out if you should pay your quarterly super early in June – check in with your Tax Agent / Accountant!
Reconcile Bank Statements, Payroll & GST
Accurate records will enable you to identify any discrepancies and resolve them before they turn into bigger problems. Reconciling your bank statements, payroll, and GST is an essential step in ensuring that your finances are in order. And if you do it now, you can fix any issues before the 30th June.
Your bookkeeper can assist you here if you’re unsure. Alternatively, The ATO has a heap of relevant information on its website.
Update Business Records
It’s also a good idea to review and update your business records. Ensure employee information is up to date including any personal details or changes to their employment status. Run through your contacts, subscriptions and expenses and clean up what you need to.
Taking the time to do this now will help to ensure that you’re starting the new financial year with accurate and up-to-date records.
#ProTip it’s also a great time to review your pricing and client contracts. If you want to nab yourself a handy Annual Legal Checklist, head over to visit my good friend Tracey at TM Solicitor and download your free copy, covering things like your client contracts that you should check each year.
Preparing for EOFY is crucial for small business owners. Following a comprehensive checklist can help ensure all essential tasks are completed on time. From tax planning and stocktake to reconciling bank statements and reviewing profit and loss, every task is important. Don’t risk non-compliance or penalties – start the EOFY process now.
Need a hand getting your books EOFY-ready? Contact us for a chat!