End of financial year checklist for small businesses
The end of the financial year (EOFY) is looming but with some planning and preparation, it need not be an exhausting time for small business owners.This checklist will help you meet your legal obligation and to get the right tax outcomes for your business:
1. Get paperwork up to date
Having important paperwork in place helps to streamline the EOFY process. Some examples of records you need to keep are:
- Receipts for sales and purchases;
- Records concerning tax returns, activity statements and employee super contributions; and
- GST & BAS statements/documents.
2. Manage your deductions
Ensuring you get the right deductions for your expenses makes good business sense, so it’s important to find out what you can claim. And there’s good news for small business owners on the deductions front: a popular federal government scheme that offers an immediate write-off for any asset costing less than $20,000 has been extended for another financial year.
The government stated in its recent Budget paper that the scheme will “improve cash flow for small businesses, providing a boost to small business activity and investment for another year”.
Consider whether you will need new office equipment in the coming year, or if existing ones need to be repaired or replaced. Note that any such assets need to be installed and ready for use by 30 June 2018 – the tax cannot be deducted if delivery or payment occurs after the new financial year begins.
You can also claim deductions if you prepay certain expenses for 12 months or less, such as professional subscriptions, electricity, rent, wages, insurance and utilities. For more information on the types of prepaid expenses that are eligible, visit the ATO’s website.
If you’re an agribusiness owner you can take advantage of Farm Management Deposits, which can help you manage your tax position in years of good production as you only pay tax when you draw on those funds deposited.
3. Write off bad debts
Writing off bad debts allows you to claim a GST refund. Before writing off a debt, consider offering the client a small discount if they pay before 30 June. Businesses registered for GST can include the bad debt in the June quarter BAS or annual GST Return to receive a refund of the GST previously paid.
4.Meet your superannuation requirements
Businesses with superannuation guarantee (SG) obligations are required to pay employee contributions of 9.5%. Meeting your obligations early, by 30 June 2018, will allow you to claim a tax deduction in your 2018 income tax return rather than having to wait until the following year.
Note that super isn’t tax-deductible until it has been paid, so ensure all super contributions are completed by the end of the financial year.
5. Be aware of due dates
Put all the required dates in your calendar to avoid ATO penalties.
This article is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
Things you should know
General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.