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 may help you meet your legal obligations and assist you in getting the right tax outcomes for your business.

1. Get your 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 Returns and Business Activity Statements (BAS)
   

 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 $30,000 has been extended for another financial year.

Therefore, now's the time to consider whether you will need new office equipment in the coming year, or if existing equipment needs to be repaired or replaced. Note that any such assets need to be installed and ready for use by 30 June 2020 – 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 website and search for 'Deductions for prepaid expenses'.

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 2020, will allow you to claim a tax deduction in your 2020 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 give yourself a reminder that will help you avoid ATO penalties.