The End of the Financial Year (EOFY) is almost near. This is the prime time to dust off calculations, review the past, and prepare for the future. Whether starting a business or having been an employer/employee for years, the EOFY can be a very busy time. June 30 is knocking at the door and it’s time to prepare for taxes. To receive special tax advantages, we should not miss certain things before the end of the deadline. As no one likes the end of the financial year panic, we have created a guideline for you to stay on top.
Update Your Paperwork
Having important papers in place helps a lot to consolidate the end of the financial year’s statement progress. They may include purchase & sales receipts, previous years’ tax returns, Business Activity Statements, GST Returns, and many more. There are a few other tasks that you need to complete as well before lodging your EOFY report. Below we have created a checklist for you to follow on record keeping and completion of other tasks for your small-medium business or enterprise:
Profit And Loss Statement
Create a summary of your income and expenses in a profit or loss statement for the last financial year. Your statement should clearly state your sales and expenses. You must elaborate and detail your expenses as they might create some objections. Subsequently, those expenses add up and hinder your net profit.
Here are a few expenses that you may add with proper documentation:
- accountant fees
- advertising and marketing
- rents and rates
- utilities (electricity, gas, water)
- and more
Create an Asset and Stock record.
In the EOFY statement, you should be able to exhibit your records on assets and stocks. Transactions regarding buying, maintaining, repairing, and selling business assets and stocks should support the amount reported in the tax return.
Create a Record of Debtors and Creditors
You should be able to portray a record of your debtors and creditors in your end of financial year statement. Your inability to portray such records might substantially affect your future tax returns and hamper losses in business.
Creating Records of Asset Purchases and Expenditures on Improvements
One of the most important pieces of paperwork you need to have in hand while creating an EOFY statement is collecting records of asset purchases or expenditures on assets. This expenditure is to calculate the depreciation expense claims and any capital gains tax.
Make Digital Copies of your Paperwork and Back Them up
Creating digital copies of all your paperwork as well as backing those copies will come in handy once submitting your EOFY statement. Make sure to create elaborate digital copies of all your paperwork i.e., scanned copies of all the receipts, payments, and sales documents of your business for future use.
Detect Your Tax Deductions And Concessions That You May Claim.
In your EOFY statement, you can claim any deductions for the majority of your business expenses. These deductions must explicitly relate to the earnings of your income. Here below are a few notable mentions for those expenses you may claim deductions for such as:
- Setting up a website
- Expenses related to motor vehicles
- Diesel fuel expense
- Business operations at home
- Travel expenses
- Machinery, tools and computers expense relating to your business operations
Get Updated with Tax Changes
Tax Changes occur a lot in any financial year. You have to be well informed about those tax changes which might include tax laws, tax deductions or tax concessions for your business. At SMG, we can help you with those changes and also help you in keeping you up to date.
Write off bad debts
For any business, you may accumulate bad debt while running your business. Bad debts are the amount of money that cannot be recovered or collected from the debtor in the financial year. They are a significant cost to your business which has to sell on credit. As such, there is no point in paying tax or GST on sales where payment is yet to receive. Hence, reviewing any bad debts is important before the end of any financial year. You are eligible to write off those bad debts at the end of the financial year’s statement.
Meeting your Superannuation requirements
Every employer who pays $450 a month of wages or more to their employees is subjected to meet the superannuation requirements. Superannuation is the money that an employer pays to the workers to provide for their retirement. You must provide a superannuation of 10% for your employee’s benefit. You may take help from expert accountants to know more about the superannuation payment changes.
Speak to a professional
Creating an end of financial year statement or EOFY can be an uphill battle with unique sets of challenges. you may easily fall behind and make mistakes that might get you into financial trouble. You may seek professional’s help such as SMG Accounting with all the paperwork and updates. SMG’s experienced team of experts in accounting and taxes has helped numerous sole traders and SMEs in preparing their end of financial years statements. This is a perfect time to seek professional advice and SMG Accounting Service is always here to support you.