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For small businesses and individuals alike, the end of the financial year is always an extremely busy time. For businesses, accounts also need to be finalised, taxes need filing and budgets planned for the new financial year.
That’s a lot, but don’t stress. Planning ahead throughout the year can help keep you on top, minimise stress and eliminate the last minute EOFY accounting rush. At Acumon, we have a list of helpful pointers to assist.
Get organised. Even in January, you can start planning ahead. As a small business, you are required to be compliant with all laws relating to business, and that includes accurate record-keeping. This is much easier to attain if you’re working on it year round and not starting in a panic on June 30.
Some of the required records include; profit and loss statement, itemised list of debtors and creditors, purchases (assets) and calculated depreciation costs. You will also need to complete a BAS (Business Activity Statement). You’re also going to have obligations to your employees, such as providing PAYG payment summaries. Your payroll will first need to be reconciled before these statements are sent out, which has to be done by the due date (typically in July).
The basic checklist of legal requirements for businesses at tax time as specified by the ATO website includes:
- You must explain all transactions
- Records must be in writing (electronic or paper)
- Records must be in English or in a form that can be easily converted
- Records must be kept for five years (some records may need to be kept longer).
Taxation can complex, and to ensure you get it right, it’s best left to a professional accountant or bookkeeper. Acumon are experienced business taxation professionals and we recommend keeping on top of your records throughout the year to save yourself time and stress. Electronic record keeping makes this much easier and consumes less day-to-day business time.
Be aware of what constitutes a tax deduction
Tax deductible expenditures are a wonderful thing, and you don’t want to miss out on claiming potential expenses that do meet the criteria. Most expenditures incurred due to the running of the business can be claimed on your tax. They must directly relate to producing your income. If you are unsure as to whether certain items qualify as tax deductions, or the rules surrounding such claims, we recommend speaking with your friendly, experienced accountant at Acumon.
Learn, prevent and plan
The old adage of ‘prevention is better than cure’ applies to EOFY, business and taxation. It is much easier to prevent a tax time crisis than to scramble desperately for records once the deadline arrives. Preparation all year round is the prevention.
Planning will assist with the preparation process, including a review of the lessons learned in years’ past. We recommend meeting with your accountant or bookkeeper at the beginning of each new financial year to discuss your plan of attack. This is a great time to review what worked and what didn’t in the previous year, and learn going forward. Experience is a great teacher. If you’d like to discuss your finances with a professional, Acumon are happy to sit down with you and discuss your finance and tax planning to reduce EOFY stress and hassle.
Tax time may be busy, but it doesn’t have to be a mad rush. Preparation is key, and constant, accurate record keeping makes all the difference. For all taxation planning queries, feel free to call our experienced team at Acumon on 4931 1100.