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Believe it or not, but the end of financial year is already fast approaching. It’s a busy time for small business owners, so it’s a good idea to get organised well in advance. Compiling your receipts and other financial records at the final hour is no fun, so our advice is to start preparing now. Checklists are an excellent way to keep yourself accountable and to ensure that you’re meeting all your deadlines on time. Here are 5 essential things to do at the end of this financial year:
GET YOUR PAPERWORK IN ORDER
To complete your tax return, you’ll need to gather, organise, and reconcile your financial records. As such, we consider good record keeping to be the key to a smooth and stress-free EOFY experience. The exact documentation you’ll need to hand over to your accountant will vary depending on your circumstances, but some of the most common records you’ll need to provide are:
Receipts for sales and purchases
Documents about goods and services tax (GST)
Business Activity Statements (BAS)
Records related to tax returns, activity statements, etc.
Documents such as receipts will also help you to claim tax deductions, so it’s important to stay diligent and organised when it comes to storing your receipts.
If you’re reading this now and feeling worried because you know that your financial information is all over the place, it’s not too late to get it sorted out. You usually have until the end of October to do your taxes, so there’s still some time to get details of your income, assets, expenses, and deductions in order
REVIEW YOUR BUSINESS AND FINANCIAL PLANS
EOFY is a great time to take stock and to plan for the future. It’s always a good idea to use EOFY as a time to evaluate your current situation and to identify things you can do differently for the next financial year. If you’re a business owner, it’s a great time to review your finances with your bookkeeper. Some of the essential reports you’ll want to run every EOFY with your bookkeeper are your profit and loss statements, your balance sheets, and your cash flow sheets. These three documents will provide a snapshot of the financial health of your business, and will help you identify potential shortfalls before they happen. They’ll also ensure that you’ll be able to pay your employees and suppliers over the incoming year. Taking the time to reflect and set goals for the next year will help you lay the groundwork to grow your business – so don’t neglect this task!
CHECK TO SEE IF COVID-19 HAS IMPACTED YOUR BUSINESS
COVID-19 has affected the way that we work and live, so it makes sense for it to also affect our tax situations. If you’re an employee, reduced overall hours due to job losses or slashed hours may mean that your employer has over-deducted your tax. Working from home arrangements also means that you may be eligible to claim deductions on things such as office furniture, computers, phone and internet bills.
JobKeeper payments also need to be included in your tax return. For sole traders, you’ll need to include the payments as business income in your individual tax return. For businesses, you don’t need to include it as accessible income in your individual tax return. If your business is a partnership or a trust, you will need to report JobKeeper payments as business income in your partnership or trust tax return. On the other hand, if your business is a company, you will need to report it as income in your company tax return.
If you are an employer who has employees who were paid JobKeeper, your employees don’t need to do anything different as the payments will be included as salary, wages, or an allowance in the regular payment summaries you provide to them as an employer.
Ultimately, the COVID-19 situation is constantly changing, so it’s best to speak directly with a tax professional who can help you determine your exact tax obligations as we approach this unusual EOFY.
GET YOUR SUPER IN
It’s one of the most essential tasks for any business owner during EOFY. If you want to claim a tax deduction for the super payments you make for your employees, then the super has to be done and paid before June 30. After this date, the opportunity for a deduction passes. Contributions are considered ‘paid’ when the super fund has received them, so get onto it as soon as possible so that you can get these expenses deducted
BACKUP YOUR DATA
Use this EOFY as an opportunity to backup your essential files and data in a secure external location, whether that be on a hard drive or in cloud storage. Fires, floods, system crashes, and hackers can wipe out years of business records in literal seconds, so it’s extremely important to be diligent about backing up your data regularly