As a business owner, tax time is a crucial period of the year. This is when the Australian Taxation Office (ATO) calculates your tax obligations based on your yearly income. It's essential to organise your financial records before the end of the financial year and ensure smooth reporting.
When is the end of the financial year?
EOFY is the same date every year in Australia on June 30, with the beginning of financial year occurring on the following date, July 1. Other key dates for business owners to know include:
- July 14: Deadline for providing Pay As You Go (PAYG) withholding payment summaries to employees.
- August 28: Due date for lodging taxable payments annual report for contractors.
- October 31: Deadline for tax return lodgement.
- May 15: Due date for company income tax returns.
Our end of financial year checklist
To avoid stress and confusion at tax time, these are our best tips to manage EOFY.
- Check in with your accountant (or accounting software)
If you are working with an accountant, this is the time of the year you will want to reconnect with them and have a chat about your financial records. Your accountant should make sure that you are taking advantage of tax relief packages or tax deduction strategies that could potentially reduce your end-of-year tax bill.
If you’re not working with an accountant, you’ll need to begin reviewing your records on your own. Making use of accounting software, like Xero, MYOB or QuickBooks, can help you keep all of the necessary information in one place.
- Take note of outstanding invoices or bad debts
To start, you will need to check if all your clients throughout the year have paid their invoices. You may notice some clients haven’t, and if that’s the case, write it off as bad debt and gather as much of the outstanding cash as you can. You can do this by collecting bank statements or receipts. From there, you can reconcile your accounts through an online platform, such as Mira.
- Claim business expenses
When you pay for something for your business, you can claim it to reduce your tax bill. If approved, it will leave more cash in your business, which is great because you’re being rewarded for investing in your business.
- Prove your payments
When putting together your business statements, you will need to make sure you have proof of bank and loan statements, invoices from suppliers, credit card statements, and records of payments to other contractors, so you can prove where all your money has gone. Proving your payments shows transparency and accountability.
- Take stock of your inventory, and top it up
Have stock? Go through your work vans and work spaces to see if any materials are missing. Then, take a look at what tools and materials you have, adjust stock quantities, and generate an up-to-date inventory list.
Once you’ve seen what you have and don’t have during your stocktake, you can make a list of the things to buy before EOFY to top up your stock and equipment. This could include new tools, uniform or tech accessories. Purchasing these before June 30 means they may be eligible for an instant tax write-off, helping you receive some money back.
- Review payroll for your staff
Next, review salary and wage information for your employees. There may be an upcoming change to employee pay rates with the financial year ending, so it’s good to review the rates and then share a payment summary to each employee of how much they’ve been paid over the year. Additionally, if employees have sent you work/travel expenses or work gear refunds, make sure to pay those off too. You have until the 14th of July to do so.
- Make sure your financial storage system is clear
When running a trade business, documents and invoices can add up quickly, so having a clear and concise storage system will help this entire process run smoothly. We recommend using a cloud-based SaaS service to back up financial data, like Mira, which holds all the information in one place, making your stresses disappear.
Manage tax time with Mira
Preparing for tax time is essential for trade owners to manage tax obligations efficiently. By following our EOFY checklist and staying organised, you can navigate the financial year-end with confidence. Remember, proactive planning now can lead to significant savings and smoother operations in the future.
Interested in learning how Mira can help you? Learn more here.