The end of financial year or EOFY: it’s plastered across all the shop windows and circled in your calendar, but for some small businesses, the focus on finalising accounts and entering accurate tax returns can be a daunting prospect.
In truth, a little preparation and can a long way. And there are plenty of people and technologies out there to help you. Once you have all your EOFY information to hand, make sure you use it to your advantage. Look back on what you’ve achieved and think and plan for the year ahead,
So what steps can you take to prepare your finances?
- Get your records in order
You may not love the word “compliance” but demonstrating you’ve conformed with business laws is an important part of your responsibilities at the end of financial year. A big part of this comes down to accurate record keeping throughout the year – you’ll need to summarise your income and expenses to create your profit and loss statement, list your debtors and creditors and show records of your asset purchases. These steps enable you to complete your business’ income tax return – another must-do. Need help understanding your requirements? Turn to an accountant or bookkeeper.
- Understand your employee commitments
If you have employees, you also have a responsibility to make sure your payroll is in order. Everyone that your business employs – and remember this may include you, depending on your business structure – needs to receive a PAYG payment Summary by 14 July. This allows employees to lodge their personal tax return in time. If you’re using Xero, you don’t have to do anything: employees can access these via their employee portal once you’ve pressed publish.
- Sort your Super
You also need to ensure that any SGC (Super Guarantee Contributions) are paid by 30 June, so you can claim these as an income tax deduction in the same financial year. When it comes to Super, don’t forget about you – the business owner. Often, we make sure all our employees have all the boxes ticked, but leave ourselves to last. You need to have something stashed away for retirement too!
- Do a stocktake
If you are selling a product – and your turnover is more than $2 million and the change in value is more than $5000 – you’ll need to do a stocktake before 30 June. Many businesses choose to do these throughout the year to relieve the pressure in June, so think about that for the year ahead. If you’re about to tackle the task now, give your customers a heads up if you think it may impact trading times.
- Think forward
You may not have all the ideal systems in place right now, but the EOFY is a great opportunity to see how you can improve your processes for the year ahead. Consider keeping electronic records stored in the cloud, to save yourself time and space, or trial an electronic inventory system to reduce the effort required at stocktake time. It’s also the perfect time to sit down with an accountant or bookkeeper to review your business – and get advice for the year ahead.
James Solomons, Head of Accounting, Xero Australia