As the 21/22 financial year rapidly draws to a close, you may feel pressured to ensure all your business paperwork is completed, organised, and ready to meet the EOFY ATO checklist.
However, with proper planning and preparation, the end of the tax year doesn’t have to be a complicated process.
Our business EOFY checklist will help make tax time the best time for your business. Download Numble’s EOFY checklist and follow the simple steps to close off your 2022 accounts and review your company’s FY21/11 performance.
Prepare for 22/23 business end of financial year
There’s no better time than the end of the financial year to file away the old and make way for the new so that you can place your business in prime position for the new financial year.
Here are some key considerations.
Changes to superannuation
- The superannuation guarantee (SG) contribution is increasing from 10% to 10.5% of employees’ ordinary time earnings from July 1, 2022. As per government legislation, this rate will continue to rise by 0.5 percentage points every year until 2025, when it will reach 12%.
- From 1st July 2022, workers earning less than $450 a month before tax will be entitled to receive the compulsory SG payment from their employers. An exception applies to:
- Employees under 18 (unless covered by a separate workplace agreement) must work more than 30 hours per week to be entitled to SG.
Check for any wage increases that may apply to your staff for the first full pay period from July 1.
This is also a great time to perform a payroll checklist to ensure staff details are correct and up to date for accurate staff payment summaries.
2022 is the year of Single Touch Payroll Phase 2. The rollout of STP2 is underway, with significant changes being implemented to how your payroll system reports STP to the ATO on each pay event. Watch out for more Numble blogs on this topic over the coming months.
Price changes in your business
EOFY is a perfect time to make pricing adjustments, especially in today’s climate of rising inflation and market volatility. Revaluate your costs in line with current market trends and consider if it may be appropriate to drop prices.
The commodification status of your industry product or service will serve as a benchmark for price increases or cuts.
Price changes in outgoings
Your activity each month can be established from an expense perspective. Take note of your outgoing costs and associated price changes and see what expenses you can delay versus what to bring forward based on your profit and loss goals.
The end of the financial year is the best time to assess your current financial situation. Consider whether you expect any major changes in the next 12 months and plan accordingly using this information.
Set strategies to achieve your financial and business goals for the next period and consider your business structure – could it be adjusted or updated to better suit your current situation?
Software and systems
July is the optimum time for businesses to switch accounting systems. Consider running a parallel trial of the new system alongside your existing software for larger enterprises. You can cease using the old system once you are confident that the new system is accurately working for your business.
COVID-19 Financial Impact on 21/22 Financial Year
Our working practices have changed considerably since COVID-19, and the ATO has brought in measures to make claiming deductions easier for many work environments.
You can claim on home office expenses such as:
- Phone and internet – Claim for phone plans or bundle plans. If the phone or device costs $300 or more, you can claim the decline in value of the item as a deduction over its useful life.
- Electricity – Cost of heating, cooling, and lighting the work area.
- Work furniture and equipment – Desks, chairs, and computers.
- Pricing and stationery
How to claim work from home expenses:
- Flat hourly rate – You can claim 80 cents per hour for each hour worked from home.
- Hourly rate (plus bills) – Using this method, you can claim 52 cents per hour and claim a portion of household bills (e.g. power, cleaning, and internet). This may result in a greater deduction.
- Per percentage rate – Add up your expenses, determine the portion spent for work and claim based on this amount.
For deductions to be valid, you must have spent the money, and the expense must be directly related to earning your income with proper records to justify the expense.
If you follow the simplified method, keep a record of the hours you worked at home using timesheets or diary notes.
Above all else, ensure your accounts and financial documents are up to date so you can quickly see how your business is placed financially. This will allow you to maximise any government assistance benefits that are available.
Other EOFY deductions you can claim for
- Self-education and professional development
- Registrations, subscriptions, memberships
- Vehicle and travel expenses
- Protective clothing, laundry and dry-cleaning expenses
- Accountant or tax agent fees
Bring your bookkeeping up to date
Make sure your accounts are up to date and accurate to June 30. Ask your qualified bookkeeper to prepare a draft set of financial reports, so you have a clear view of how your business performed over the previous 12 months. Sit down with your bookkeeper to review your results and compare them to previous years.
Meet with a qualified accountant
There are many things to consider at an individual level for business owners; engaging a qualified expert is always worthwhile to get the most up-to-date, tailored tax advice for your unique business.
Your tax advisor can provide a complete and thorough review so you can maximise your tax return and plan successfully for the new financial year.
Do you need help preparing your accounts for the end of financial year? Get in touch today for expert bookkeeping help at every step of the way.