Ever wondered how the end of the financial year could be more than just a deadline but a strategic gateway to financial success? Well, it turns out that during this time, individuals and businesses get a great chance to organise their financial matters.
In this blog, we will explore the paramount significance of mastering your EOFY checklist. Beyond being a mere deadline, the EOFY serves as a strategic moment for meticulous financial assessment and planning.
You can use the following checklist to prepare and get your business organised for this crucial time.
Check what tasks that need to be completed
As a small business owner, you may need to take care of the following yearly tasks:
- Prepare a concise overview of your business’s financial performance through a profit and loss statement, highlighting income and expenses.
- Conduct a thorough stocktake by referring to the Australian Taxation Office (ATO) website for guidance on managing assets and stock.
- Maintain organised summaries of debtors and creditors to stay on top of your financial obligations.
- Compile records of asset purchases and expenditures on improvements for calculating depreciation expenses and addressing capital gains tax considerations.
- Ensure timely completion and submission of income tax returns to meet regulatory requirements.
- Lodge yearly reports for various tax types, including PAYG withholding and finalising income statements for Single Touch Payroll, FBT, and GST.
- Stay compliant with superannuation requirements to fulfil obligations towards employee retirement savings.
- Digitise paper records and implement a robust backup system to safeguard crucial business information.
Tax deductions and concessions that can be claimed
As long as the expenses are directly related to earning more income, you can claim deductions.
Examples of deductible expenses include:
- Setting up a business website.
- Motor vehicle expenses.
- Diesel fuel usage.
- Operating from home.
- Business-related travel expenses.
- Use of machinery, tools, or computers.
It is essential to maintain records that substantiate claimed business expenses. Appropriate documentation is necessary to validate the legitimacy of deductions.
Sole traders can use the ATO app’s myDeductions tool. This tool facilitates the recording of business income and expenses throughout the year, making tax recordkeeping more efficient..
You should consider planning as the financial year concludes and also write off any outstanding debtors or assets to maximise tax deductions.
Ensure your tax agent is a registered tax agent
Ensure that your tax accountant or tax agent is officially registered with the Tax Practitioners Board (TPB) by utilising one of two primary verification methods:
TPB Register Search
Conduct a search on the TPB register to confirm the registration status of your tax agent. This online resource provides up-to-date information on registered professionals, allowing you to verify their credentials efficiently.
Registered Tax Practitioner Symbol
Look for the distinctive registered tax practitioner symbol on various platforms such as their website, stationery, brochures, or business cards.
This symbol not only signifies their registration but also includes details about the type of registration and their unique registration number.
At Clear Tax Accountants, we take pride in being a registered and recognised entity with the TPB (Tax Practitioner Board). Our commitment to transparency and professional standards is reflected in our up-to-date presence on the TPB register.
Choose Clear Tax Accountants for trustworthy and reliable financial services backed by our official registration with the TPB.
Stay up-to-date with tax changes
Stay informed about annual tax updates to make sure you are well-versed in any tax changes that may impact you. These changes may include shifts in tax legislation, modification to deductions, and new concessions specifically tailored for small businesses.
Your tax agent can help you understand these changes. Along with this, you can stay informed by subscribing to the ATO’s small business newsroom and checking it regularly.
Review your finances
You need to dedicate some focused time to assess your financial situation either independently or in collaboration with your accountant or bookkeeper.
See if you have successfully met your financial goals and objectives for the previous financial year. This helps identify areas of improvement and strategies for the upcoming financial year.
In order to improve your financial situation, you will have to pay attention to the cash flow. You will have to explore ways that can increase your cash in and reduce your cash out. To learn more about ways to improve cash flow, read our complete blog on cash flow management.
Be aware of tax refund scams
During tax season, it is essential to be cautious and remain vigilant against tax refund scams.
Common tax time scams include the following:
Tax refund scams
Scammers may assert that you’ve overpaid your taxes and are entitled to a refund. However, to facilitate this refund, they insist on payment for alleged administration or transfer costs. Be cautious of any unsolicited communication requesting such payments.
In these scams, fraudsters claim that you owe additional taxes and demand immediate repayment. They may request sensitive financial information, such as credit or debit card details, or ask you to transfer money through various means.
Additionally, some may ask you to purchase iTunes cards and provide the card details as a form of payment.
Review your business as well as marketing plans
You should allocate dedicated time to prepare for the upcoming year. By consistently reviewing and updating your plans, you can enjoy several benefits:
- Regular reviews help keep your goals and priorities at the forefront of your business strategy.
- By assessing the success of your current strategies, you can identify areas for improvement or adjustment.
- Regular reviews empower you to adapt swiftly to shifts in your environment, whether they be market trends, regulatory adjustments, or technological advancements.
- Reviewing and updating plans enable you to prioritise tasks effectively.
Review your business structure
With growing business, the needs also keep on growing. So, you may be required to change your business structure or restructure your business.
Some of the most common business structure changes include:
- Sole trader to company
- Sole trader to partnership
- Partnership to company
Restructuring the business can help you meet financial goals and objectives, such as improving the profitability or cash flow of the business.
However, before moving further with any changes to business structure, ensure that you seek professional advice from legal and financial experts who can provide insights into the implications of such decisions.
Check your insurance
When your circumstances change, you may be required to update your level of coverage.
You must read the PDS or Product Disclosure Statements for your insurance policies carefully rather than assuming you are covered.
The end of financial year is a crucial time for every individual and business in Australia. It is an opportunity to review your financial performance, claim your tax benefits, and plan for the future. By following the checklist in this blog, you will be able to master your end-of-financial-year tasks with ease and confidence.
If you need any assistance with your end of financial year tasks, such as preparing your tax returns, managing your cash flow, or planning your budget, we are here to help. At Clear Tax Accountants, we offer professional and personalised accounting services for individuals and businesses.
We have a team of qualified and experienced accountants who can handle all your accounting needs with efficiency and accuracy. Whether you need a simple tax consultation or a comprehensive financial solution, we can tailor our services to suit your specific situation and goals.
You can reach us by phone, email, or through our website. Don’t miss this opportunity to save time, money, and hassle with Clear Tax Accountants.
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