The end of financial year (EOFY) is fast approaching. It’s an important time of year for small and medium-sized enterprises (SMEs), and it can often be stressful if you haven’t kept updated records. Fortunately, with many businesses using electronic accounting and bookkeeping software today, most of the information you need is already available to make tax time a breeze. Keep reading for an overview of everything an SME needs to prepare for and focus on at EOFY.
Even if you have an accountant prepare and lodge your tax return, there are still several records you’ll need to get ready. Some of these documents will help your accountant prepare your tax returns, while others will help to give you a clear picture of how your business has performed this financial year. The key record-keeping tasks you should complete in preparation for EOFY are:
Outside of the expert advice you receive from your accountant, one of the biggest benefits of having a registered tax agent prepare and lodge your tax returns is the later deadlines this allows. These deadlines vary by turnover:
A month or two before EOFY is also a good time to complete tax planning, so you know your payment obligations for the current financial year and have an estimate for the coming year. This allows you to budget for upcoming payments and ensures there aren’t any surprises when payments are due.
Ideally, if you’ve been keeping accurate records of your expenses throughout the financial year in a cloud-based accounting system, then you should be able to get an estimate of your deductions and tax payable relatively quickly. Given that deductions reduce your taxable income, if there are any business investments you were thinking of making in the near future, the EOFY can be an opportune time to make these purchases. Remember, this isn’t a time to go on a shopping spree, but a time to wisely plan any spending that will help your business thrive in the financial year ahead.
The EOFY is also a great time to sort out your debtors and creditors. Make a list of each and work your way through chasing up any late payments and making or negotiating (where necessary) your payments to creditors. For those debtors that aren’t going to pay, you may need to write it off as bad debt. And for businesses that account for their income on an accrual basis, bad debt can also be a deduction, but you need to:
If you worked from home throughout the financial year, you might be able to deduct relevant expenses at tax time. To make these deductions, make sure you have some records of when you worked from home and talk to your accountant about which method is best for calculating your deductions. The Australian Taxation Office website has details about each method.
EOFY is a great time to assess your business performance for the past year and how you’d like to grow in the year ahead. Perhaps you’ve just experienced explosive growth over the last year, and now you’re looking to consolidate your operations, or maybe your business has struggled throughout the pandemic, and you need some finance options to get back on track. No matter what business opportunities and challenges you’re facing, Moneytech is here to help.
As Australia’s only purpose-built and fully integrated business growth platform, Moneytech partners with businesses to support them with recovery and growth. Whether your business is seeking working capital to cover your day-to-day expenses or you’re looking for funds to invest in growth opportunities, we can help. Contact us today, and one of our experts will be in touch to discuss your options.
