Whether you’re just starting out in business, or you’ve been your own boss for years, the end of the financial year (EOFY) can be a busy time. For multi-tasking small business owners, freelancers and tradies, it’s easy to miss something in the rush, so to maximise your business opportunities as we near June 30, here’s a handy EOFY checklist to get your finances in order and your business planning off to a good start.
1. Get Your financial books in order
Get ready for tax time by organising and updating your financial information to give to your accountant. For some small businesses, this is a painful exercise while for others, it’s a breeze. Whether you’re a ‘solopreneur’ with a glovebox full of paper receipts or a small business owner who has a dedicated bookkeeper, you have to get this step done before you can do anything else. Having accurate information means your goods and services tax (GST) and pay as you go (PAYG) withholding accounts are up to date. Don’t forget that Payment Summaries (or Finalisation Declarations) must to available to employees by 14 July each year.
Keeping your accounts up to date, and essential paperwork in place helps streamline the EOFY process. Make sure you prioritise this task. If you need help to get on top of the numbers, hire an experienced bookkeeper to help you. Then “Tick” one less job for you to worry about!
2. Meet your accountant
As you get closer to the end of June, it’s time to meet with your accountant to make sure your financial records are all in order (and meet Australian legal requirements). Tax planning should happen BEFORE the end of the financial year. Depending on how well or badly you’ve done, your accountant can advise on how to maximise your profit, reduce your loss and minimise your tax liability. They can also give you a good indication of how things are going financially for your business, what your likely tax position will be, and where you are, financially.
3. Write off bad debts
Review your Accounts Receivables and make a concerted effort to get any outstanding invoices paid. Before writing off any bad debts, consider offering the customer in question a discount if they pay before 30 June, or paying by instalment. Be realistic, if you have exhausted all your debt-collection options, and know you’re never going to get paid, then write off any bad debts before June 30. There’s no point reporting the profit or GST on invoices that are never going to be paid. Businesses registered for GST can include their bad debt write-off in the June quarter BAS or annual GST Return
4. Meet your superannuation requirements, or prepay for an added tax deduction
Ensure your employee super contributions are up to date, as well as your own. Can you afford to make additional contributions for yourself? Provided you keep within the SGC limits, paying extra super might make good sense by reducing your company taxable income and boosting your super fund balance.
Businesses with superannuation guarantee contribution (SGC) obligations are required to pay employee contributions of 9.5%. Meeting your super obligations early – paying all outstanding super before 30 June, will allow you to claim a tax deduction in your 2019 income tax return rather than having to wait until next year.
Remember that superannuation IS NOT tax-deductible unless it has been paid on, or before, the due date. At a minimum, superannuation payments for your employees are due each quarter, 28 days after the end of the quarter. If you do not keep your staff superannuation payments up to date, you may be penalised in several ways; administration fees, interest penalties, and no tax deduction. Ensure your outstanding super contributions are lodged and paid by the end of each financial year.
5. Get ready for STP (Single Touch Payroll)
STP (Single Touch Payroll) is mandatory for employers in Australia from 1 July 2019. Employers with more than 20 employees commenced reporting STP from 1 July 2018. Smaller businesses are expected to get themselves STP-ready from 1 July 2019. Some micro or family businesses will have an extension to 30 September 2019.
Are you ready to go? If not, contact your accountant or bookkeeper to assist with your transition. They can advise about your required start date or in some circumstances, negotiate a transitional or alternate arrangement. There is no need to wait until 1 July; you can join the thousands of small employers who have already started reporting at any time. Once you have opted into STP, you will no longer have to issue Payment Summaries to your staff. Once STP is implemented, you will be required to lodge a Payroll Finalisation Declaration with the ATO by 14thJuly. Staff will then access their annual payroll information through their personal MyGov account.
As this change affects how your staff access their payroll information, it is essential to let them know about these changes and what to expect. If you are unsure about what they need to know, talk to your accountant or bookkeeper.
6. Review and update your busienss growth and marketing plans
Now that you know where your business is financially, it’s time to take a look at how it got there, and where you want to go. Pull out your old business plan and any other planning documents; review last year’s goals, assess your successes and failures, use this information to set up your new ones.
Ask yourself, did your business accomplish what you set out to do? If not, why not? Factor your response into your business and marketing plans for the coming year. Regularly reviewing and updating these plans will help remind yourself of your goals and priorities, assess whether your strategies are working, make the most of new opportunities as they come your way and ultimately maximise your efforts so that you can work smarter and not harder!
7. Set your FY20 budget
Now that you know what your goals for your coming year, it’s the perfect time to sit down and get into the detail of how you’re going to make them happen and build those plans into an FY20 budget. If you need help, speak to your bookkeeper or accountant. They will be happy to help.
8. Re-evaluate your business structure
As your business expands and grows, you may decide to change your business structure or to restructure your existing business. Different compliance and taxation regulations apply, depending on your business structure. For example, there are tax differences between a sole trader and a company structure to be aware of. Make sure that you do the due diligence and talk to your accountant.
9. Consider your staffing needs
Finally, it’s time to assess your most valuable asset – your staff – and reflect on whether you have the right people in the right roles. Are there performance issues you need to tackle or achievements you want to recognise. Ask yourself; do I need more, less, or different staff to achieve my goals, are there elements of my business that I could outsource to specialists, how can I focus on what I do best to maximise my team’s, productivity? Let’s make FY20 be your best year in business yet!
If you would like to explore how outsourcing bookkeeping could give you back critical time so you can add to your bottom line, call Kim Maine at BASic Bookkeepers on 1300 852 575 to arrange a free consultation.
