5 Important Tips Every Business Owner Know Before EOFY in Australia

The financial year is nearing its completion and small business owners have started getting butterflies in their stomach. They are often seen working all through the year till the end of the financial year. Well, a little preparation, planning and with the help of small business financial planner from now can turn the end of the financial year (EOFY) into the most blissful time for you. It’s good to know that even the tiniest error can make the situation cumulatively worse, to the direst scenario leaving you with unprecedented tax obligations.

Five important EOFY aspects every small business owner should know!

So, as the financial year comes to an end, small business owners try to complete as many tasks as possible. Let’s not make the journey unreasonably complex with the cessation of each financial year. Here an EOFY checklist comprised of five crucial aspects which every small business owner in Australia should know.

1. Compliance with superannuation obligations!

Certain small business owners are required abide by potential superannuation guarantee (SG) liabilities. If you are also a business of that sort, then, you need to pay employee contributions of 9.5 percent. So, make sure that you meet your SG obligations by 30^th June of the ongoing financial year. As a result, you don’t have to wait until the arrival of the next year to claim your potential deductions. Conversely, you can claim them during the existent financial year itself concerning your income tax return.

2. Prepare all your tax credentials!

With the onset of every accounting year end, small business owners must prepare to file their potential taxes. While doing so you need to gather certain documents without a failure. These include receipts, records of business, financial credentials, and documents of business costs and so on. Other documents include asset disposals and additions, your financial statements and other imperative documents. As an employer, you might need to fill out certain types of forms by 31^st January provided below.

• Form 941-used to report income taxes, Medicare or social security taxes in the form of a quarterly tax return

• Form 940-used to report Federal Unemployment Tax

• Form 1099- used for any individual who you’ve paid AUD600 to the minimum. Say for instance, freelancers etc. and

• Form W-2s for each of your employees who did have an income, social security withheld or that of Medicare tax

You can access any of the aforesaid forms only if they apply to you.

3. Consider writing off bad debts!

Do you pay goods and service tax (GST) on an accrual basis? Then, you can claim back the tax which you’ve already paid. These sums are what conventionally known as bad debts. Besides, also include all your potential bad debts in your quarterly BAS of June. If not, then you should at least include them in your GST return without a miss. As a result, you will receive a lump sum refund against the goods and service tax which you have already paid!

Offer discount to your client!

Again, it might happen that your client had paid the same prior to June of the pertinent financial year. In that case, you must offer him or her a discount even if it’s a nominal one.

4. Reconciliation of accounts payable and receivable!

It might be the case that you owe an urgent project to one of your clients for completing a small portion of it. Again, it might happen that you owe a number of clients for any work which has been completed during the ongoing financial year. So, you must consider reconciling your accounts payable year end and accounts receivable effectively. This task must be completed imperatively as per the accounting protocol of Australia.

The benefit!

Timely reconciliation of your accounts receivable and payable during every financial year of accounting is quite beneficial for small businesses. It will save them from the hassle of being left with potential payments to be collected. As a result, they will not be levied with heavy-duty taxes in the subsequent financial year.

5. Generate the crucial financial statements!

While preparing year end accounts with the help of bookkeeping services, it is imperative that you generate the crucial financial statements effectively. Make sure you generate the following three types of statements by optimizing a high-end accounting software system.

• Cash flow statement: This statement sums up the cash and its encompassing equivalents leaving and entering your business. It proves the efficient fund management by any particular business.

• Balance sheet: This statement provides a comprehensive picture about the potential debts, obligations and assets of any particular business.

• P&L (Profit and Loss) Statement: A profit and loss statement basically recapitulates the potential expenses, costs and revenues which a business earned during a certain period.

So, these were the five crucial aspects which every small business owner in Australia should know during an EOFY period. Hopefully, by adhering to each of them effectively you can sail through each financial year with flying colours.