The end of the financial year is a bit like Christmas. We all know when it’s coming but we’re never as prepared as we should be. This year, your reporting obligations may be a bit more complicated because government supports like grants and JobKeeper need to be included. But one thing never changes and that’s the importance of getting your financial ducks in a row to legitimately minimise the amount of tax you need to pay.
To help you, we have seven handy tips to prepare for the end of the financial year.
Tip 1: Government assistance needs to be recorded
If your business received any government-related payments, grants or rebates (such as JobKeeper payments) you need to include them in your tax return and possibly your BAS. If your business provided rent relief to its tenants, this also needs to be included in your tax return.
In our opinion, there has never been a more important time to engage the assistance of a knowledgeable bookkeeper. If you don’t have a bookkeeper or you aren’t confident about your current bookkeeper’s abilities, get in touch with us.
Tip 2: Did COVID adversely affect your business?
Many businesses have suffered losses as a result of COVID-19. If your business is one of them, you may be eligible for a tax offset under the Loss Carry Back rules. The eligibility criteria and how the tax offset operates is quite specific so it’s best to discuss this with your bookkeeper or accountant.
Tip 3: Did your business invest in new equipment?
Over the past year, many businesses have expanded and flourished. As a result, they may have invested in new equipment and other business assets. If this sounds like you and your new assets meet the criteria of an eligible depreciating asset, you may be able to deduct the full cost of the assets. Get advice before June 30th, to see if this tax deduction applies to your business.
Tip 4: Stocktaking
If you sell products it is best to start the stocktake before June 30th so you are not leaving it until the last minute.
At Numeric Eight, we highly recommend our clients invest in an inventory management system that provides real-time data on their stock levels. It’s particularly important for businesses that use multiple channels to sell their products such as their website, sites like eBay or Amazon and retail outlets.
For more information on the most appropriate integrated inventory management system for your business, book a time to chat with us.
Tip 5: If you have staff, ensure your STP (Single Touch Payroll) information is correct
At the end of each financial year, you need to make a finalisation declaration in your STP so it’s critically important this information is correct. If you aren’t confident, get in touch with Numeric Eight urgently.
Tip 6: Get all your paperwork in order
If you groaned when you read this tip, then it’s time to get a proactive bookkeeper onboard because with the right systems in place, this should be the easiest part of preparing for EOFY.
Your paperwork includes:
Statements for all business loans – including the amount of interest paid and the June 30th balance
Copies of business insurance policies and the total premiums paid
Payments to contractors, labour-hire and suppliers
Business motor vehicle expenses such as leasing costs, insurance, rego, fuel, repairs and servicing
Any other relevant documents that may be a tax-deductible expense for your business
Tip 7: Keep all tax records for a minimum of 5 years
Failing to keep these records for at least 5 years could lead to paying penalties and interest if you get caught.
At Numeric Eight, we believe business owners should be free to focus on their business – not their paperwork. That’s why we offer a full range of bookkeeping, accounting and financial management services for our clients. Our team can also help you if you feel you have outgrown your current accounting or inventory management systems.
It starts with an obligation-free chat. To arrange a time, call 02 9437 1785 or email firstname.lastname@example.org