As we near the end of the 2022-2023 financial year, many business owners will start thinking about the end of the financial year processes as the 30th of June deadline draws near.
To take the stress out of your EOFY (End of Financial Year), our accountants, bookkeepers, brokers and financial advisers have created a checklist with the most important items that you should be across.
1. Get Started On Your Tax Planning (If You Haven’t Already)
This is the first and most important point for all business owners. If you haven’t already, reach out to your tax accountant and ask them about what tax planning actions you need to take prior to 30 June. This should cover superannuation contributions, purchasing assets, trust distributions/company dividends and everything in between.
If you have concerns surrounding tax planning, we can help. Read more from our experts:
- Maximise Your Savings with Tax Planning: A Guide for Business Owners in Australia
- Top five mistakes to avoid in tax planning
- Tax planning and its effects on business cash flow
2. If You Have Employees, Make Sure You’re Up To Date With STP Phase 2
This one will catch a lot of small business owners off-guard. Important to note that STP (Single Touch Payroll) is even applicable to businesses that are family operated with only ‘closely held payees’ (no external employees). Your accounting software should have specific instructions on how to make the switch or your payroll specialist/bookkeeper should already have this taken care of for you.
The purpose of Phase 2 is to allow the ATO to increase their data collection on employee pay types and align payroll software with employment law. The ATO can levy penalties for non-compliance so be sure to switch ASAP if you haven’t already, as the deadline has already passed.
3. Keep On Top Of Your Lodgment Due Dates And Deadlines
This will enable you enough time to not only compile information to provide to your accountant and bookkeeper for BAS, STP finalisation and tax return requirements but also will allow you to plan cash flow for any upcoming tax debts. Your accountant and/or bookkeeper will have access to the ATO agent lodgement program which gives extensions on lodgment and payment due dates.
The ATO has also provided a detailed list of due dates for different entity types but if in doubt always ask your adviser first. Check Carbon’s Financial Year Calendar to see what is due and when the deadline is. Alternatively, you can check the below for information:
4. Review Your Debtors And Creditors
The best approach is to generate a debtors/creditors control report in your accounting software and review anything that is older than two months. Sending follow-ups and reminders to customers during EOFY is effective as they will likely be wanting to tie up loose ends as 30 June approaches.
5. Review The Interest Rates On Your Business Loans And Home Loans
This is more relevant than ever, on the back of ten consecutive interest rate rises, banks are becoming increasingly competitive for new business, offering sharp rates and cashback bonuses to move your loans across. Talk to your finance broker to review your rates and your current borrowing structure. Carbon Finance & Lending brokers are experienced with simple to complex lending structures and can conduct a review free of charge.
Here are some more resources on business and home loans:
- Is it time to fix your home loan?
- Is it worth refinancing my home loan?
- Common home loan terms
- The difference between secured and unsecured business loans
- Apply for a business loan in minutes with Prospa
- Debunking common small business loan myths
6. Compare Budget Forecasts To Actuals For The Financial Year
Reviewing your actual income and expenses compared to forecasts made at the start or prior to the current financial year will help you identify key areas to improve and will assist you in making more accurate projections for the next financial year. This in turn will flow into better tax planning and tax outcomes. Budgets and forecasts should serve a purpose and not just be made once a year and ignored, periodic reviews will assist in ongoing improvement, whether that be tightening your spending or increasing your turnover.
7. Getting Up To Date Valuations On Your Assets
This is an area that most small and medium business owners ignore, however, it can be incredibly useful to have an accurate and up-to-date snapshot of your net assets, especially assets that are not liquid such as cash currency or listed shares. Valuations can be performed on the following assets by reputable third-party valuers:
- Residential property (includes the family home and investment properties)
Understanding your net wealth, in conjunction with your financial planner, can help you create a plan towards retirement. Ask your financial planner about apps and tools which can be used to keep track of your net wealth accurately.
8. Understand Your Industry-Specific EOFY Compliance And Requirements
The ATO has identified at-risk industries that need to perform additional reporting at the end of every financial year. The main one being TPAR (Taxable Payments Annual Report).
TPAR is applicable to builders, cleaning contractors, IT consultants, among other industries, and the list is growing every year. The ATO have provided guidelines so businesses know to enrol in the program. Click here to find out more.
Speak to your accountant if you are unsure of your industry-specific requirements.
9. Review Your Insurance Policies
Insurance requires periodic updating as life changes, from vehicle use to building extensions on the family home, and changes in your health needs.
Always use an insurance broker to tailor your policies to your individual and business needs and make sure they conduct frequent reviews to keep your policies up to date and to ensure you’re not paying for anything that you don’t need. Carbon’s insurance brokers are happy to discuss all of your requirements and create bespoke insurance policies that fit your needs.
10. System And Process Overhaul
There is no better time to switch over to a different accounting software, if it’s not working for you, or make changes to your internal workflow and processes than 1 July of every year. As businesses are becoming increasingly electronic, we recommend Xero as our go-to accounting software, as it has proven to keep up to date with legislative changes to payroll and the Xero environment is compatible with many payroll add-ons, inventory management software and customer relationship management systems.
Have more questions about how to plan for EOFY?
Carbon’s recommended EOFY services are delivered by our range of specialists across accounting, bookkeeping, finance and lending, insurance and financial planning. Get in touch with us and we can assist with any or all of your business requirements