EOFY is here! Is your business sorted?
End of financial year is close, and no doubt some businesses are in a flutter of stress and panic to get their administration and relevant financials finalised. If you are behind in what is needed to close out the tax year for your business, you can check out part 1 and part 2 of our guide to preparing for the end of financial year.
By now, you should be up to date with the requirements to prepare you for this busy time of year, but here are our final tips to keep your business on top.
1. Get your paperwork in order
Businesses should make sure their records are both compliant and up-to-date. This step is can take some time, so a bookkeeper will likely be useful to collate and advise the type of information you need to keep on hand. However, some additional steps could help keep you on track:
→ Conducting a stocktake – this step is used to ensure that the inventory you think you own matches the amount you currently have. If there is a mismatch, it can indicate a range of business implications including incorrect data entry, stolen or damaged stock, or suppliers not correctly supplying stock. It ensures your records are correct, but can also highlight important areas of the business that need addressing in order to improve profitability.
→ Producing a profit and loss statement – A profit and loss (or income statement) lists your sales and expenses and is generally recorded on a monthly, quarterly or yearly basis. It tells you how much real profit you’re making, or how much you’re losing. The Australian government provides some great material on the how to create and lodge a simple profit and loss statement on their website.
→ Income tax return – complete and lodge your income tax return for the financial year coming to a close, if not already done
→ Meeting your super requirements – understand the superannuation requirements regarding what you are legally required to pay your employees. Superannuation is an important legal obligation so be sure to be on top of this step.
→ Summary of debtors and creditors – This can be submitted to the ATO when submitting your tax returns and helps with understanding your business transactions.
2. Do you need an accountant? Or will you lodge your claim by yourself?
Are you able to submit the financials required to the ATO yourself or will you need to hire a tax agent to help you produce these documents? It is good to be prepared for this as there is often some waiting time and appointments need to be made for some tax agents. Figure out what is best for your business and if you could benefit more from having someone with the experience to help you through this process. Of course, this heavily depends on factors such as business structure, employees and annual turnover among others, but should be researched further to make the most appropriate decision for your business’ circumstances.
3. Goals should be finalised
As mentioned in our previous EOFY posts, you should now have had plenty of time to finalise your goals and understand exactly what it is you want to achieve in the coming year. Make sure they are specific, measurable, achievable, realistic and timely (SMART). Set those goals in stone, stick to it and set key performance indicators to help you stay on track, with the view to revisit them towards the end of next financial year.
4. Do it before the deadline
There is actually a final date that businesses can submit their tax documentation: you can lodge your own tax return up until the 31st of October 2017. If you decide to use a tax agent, you can lodge after this date but need to contact the tax agent before the 31 October to qualify.
5. Backup and secure your files
Cyber threats are at an all time high, and it has never been more important for businesses to lock down their data. Gone are the days of locking up your shop – lock up your computer! As recent attacks of business data have become more rampant across the world, it has never been more important to ensure you have backed up your data on an external hard drive, and/or to cloud-based platforms. Read more about the recent cyberattacks and how it can affect your business.
6. Make the most of the instant asset write-off
The Australian government allows SMEs to instantly write-off individual assets of a value of $20,000 or less. What this means is if you buy an asset on or before 30 June 2017 and it costs less than $20,000, you can immediately deduct the amount as part of your 2017 tax return.
You are eligible to claim a deduction for the business portion of each asset (new or second hand) costing less than $20,000 if:
→ You have a turnover less than $10 million (this has increased from $2 million), and
→ The asset was first used or installed ready for use in the 2016-17 income year.
Stay on track!
These tips, alongside those previously mentioned, should be enough to get you over the line come the end of the month. End of financial year is a hectic time for all businesses and shouldn’t be taken lightly, however, it is also a time for renewal and realignment with aims, goals and objectives. Although a busy time of year, it is also a great time to demystify your existing business operations and clarify exactly what your focus is, as well as the direction in which your business is going.
For more tips and advice, connect with Spotcap Australia on social media, or join our monthly newsletter above.
Until next time,
The Spotcap Team