Whatever shape your financial year took, financial year end gives small businesses a chance to reshape and finish the year on a positive note. But there are only a few days to make sure you are compliant with the Australian Taxation Office.
There are numerous things as a small business that you can do to bring your financial records and financial statements in order before the financial year-end. Here are seven EOFY tips you can do:
End of Financial Year (EOFY) Helpful Tips
The best way to have a successful financial performance and financial reporting is to plan ahead and keep in touch with your Accountant or Tax Agent to do so. Being aware of your tax obligations during the entire year is an immense help during tax time because you can understand your business income and possibilities for potential tax deductions.
Here are some EOFY resources and tips to help you have a successful financial year for your small business:
Consider your cash flow
For many small businesses, end-of-year steps will require an outlay of cash. A weak cash flow limits what you can do between now and 30 June. Assess your cash flow and capital gains position now, so you know your capacity to take action before 30 June.
Review your receivables
Follow up with customers who owe you and remind them to pay now. Offer early payment discounts to customers with significant balances. If you lack the resources or time to follow up, hand over your receivables to an external collection agency. Remind your customers that they may be able to claim the expense and receive a tax benefit or even a tax refund.
Review your small business inventory
If you are a small business owner that holds inventory, you must carry stocks that sell. For example, if you are a clothing retailer, keeping summer stock in winter won’t be the best use of your storage space. Year-end might be a good time to do whatever it takes to sell out-of-season products. Conduct an eofy sale and offer these products at a discount. You can also offer bundles including these products.
Review your assets register
Sometimes we hold assets that are no longer useful. Carrying broken or outdated technology assets in the business doesn’t help business operations. Identify items for write-off and consider disposing or replacing outdated with new assets that will improve efficiency and productivity in upcoming financial years. Remember to write off any items that are no longer with you, broken or not of use.
Consider your taxation position
If you haven’t done so already, it is time to undertake tax planning urgently to determine what your tax position could be. Knowing your tax deductions, company tax returns, taxable income are just some of the things you should consider to determine your tax position. Be aware that you may need cash to achieve a more favourable tax result. Contact your tax professional or registered tax agent for advice if you have not done so already.
Know your Tax Obligations
For example, some businesses may benefit from paying staff superannuation in June without waiting for the standard payment date. Others may consider paying their suppliers early or pre-paying some expenses.
Review your books to stay compliant
The end of the financial year is the time to make sure that your books and records are complete, up to date and reflect the accurate financial position of your business. By doing so, you ensure you are compliant with the Australian Taxation Office, are up to date on your business income, and business expenses, and most importantly, you will have an accurate overview of any possible tax return opportunities. The last thing you want is to find out that your end-of-year actions were based on incorrect numbers.
Whatever you choose to do in preparation for the end of the Australian financial year, review your position now and have a strategy you can implement in the next few days. This will allow you to finish the financial year on your terms and help you plan for an even better next financial year.
Need help with reviewing your books at the end of financial year?
Understanding your tax obligations as a small business is a must, yet it’s tough when you are the person holding your small business together.
If you need help with reviewing your books to confirm that they are complete and accurate, or perhaps ensuring your receivables, payables, income tax and tax returns are under control – we can help. We have bookkeepers who are Payroll, BAS and PAYG industry experts to help small business owners such as yourself understand your tax obligations, cash flow, and finish the financial year on a positive note.
