The days leading up to the end of the financial year are crucial, and it is usually a hectic time for businesses. During this time, It is easy to miss tasks that could affect your business adversely later. This handy step-by-step EOFY checklist will help ensure that you are compliant, prepared and can maximise your financial opportunities in the lead up to June 30.
- Review your Balance Sheet and Trading Profit & Loss statement;
- Reconcile your accounts receivable, accounts payable, bank accounts and loans;
- Review your aged receivables and write off any bad-debts for which you may be able to claim a tax deduction;
- Ensure your GST account reconciles to your latest business activity statement (BAS);
- Ensure you are complying with your superannuation obligations and are meeting the payment deadlines;
- Reconcile the PAYG withholding amounts at year end with your payroll records;
- Ensure that your financial records comply with Australian law.
2. Salaries, Awards and Payroll
- Record all staff payments by the end of June. If your business has contractors and freelancers, ensure that all outstanding invoices are paid;
- If you have applied for a deferral for STP, make sure:
- you provide your employees with their PAYG summaries by July 14;
- you lodge all employee PAYG summaries with the ATO by August 14;
- Check if your business needs to lodge a Taxable Payments Annual Report (TPAR), which is a report of total payments made to all your contractors (subcontractors, consultants and independent contractors). You may need to lodge a TPAR by 28 August- Learn more;
- Ensure that all staff salaries are in line with the appropriate awards and any other statutory requirements;
- Ensure that your actual payroll transactions match with what is recorded in your payroll software. This will help determine if you are within the payroll tax threshold;
- Before the first payment of the next financial year, make sure that you have updated the tax scales, so the correct tax is deduced;
- Check that the correct super contribution applies to all staff. The current Superannuation Guarantee Rate is 9.5%;
- Consider paying outstanding superannuation by 30th June to claim a tax deduction.
- Conduct a stock take of your inventory and equipment to determine the closing value;
- Identify any obsolete or damaged goods that can be written off as tax deductions;
- Any adjustments identified in the stock take, including description, location, quantity and damage/obsolescence should be recorded in the relevant stock or assets module as of 30 June and reflected in the 2018-19 accounts.
4. Preparation for your Accountant
If an external accountant prepares your annual Company Tax Return, they may require several reports and a backup of your data as at the end of the financial year. The reports they may need include:
- Trial Balance, Balance Sheet, Trading Profit & Loss;
- Aged Trade Debtors;
- Aged Trade Creditors;
- Inventory Stock Value;
- Job Work In Progress;
- Asset Purchases & Disposals, Depreciation Schedule;
- Payroll Financial Summary for all Staff;
- Details of any internal or external loans;
- Details of any purchase or disposal of investments;
- Details of any R&D claims.
Additional reports may be required; please check with your accountant.
- Income tax return (check with your tax advisor for the due date);
- PAYG withholding payment summary annual report (if applicable);
- Business Activity Statement (annual/quarterly);
- ASIC annual report;
- Fringe benefits tax return.
6. Software & System
- In this day and age, technology gets superseded very quickly. Likewise, the enhancements and ATO compliance changes that come with updated versions are significant. As you move towards the end of the financial year, it is worthwhile reviewing your current technology and information systems. EOFY is a great time to invest in software systems for your business as you may be able to take advantage of some great offers and save money on both the software system and its implementation. Another reason for companies to invest in systems and technology is the instant asset write-off which enables you to claim a deduction for assets costing less than $30,000; Read More
- Single Touch Payroll was one of the most significant reporting changes introduced by the Australian Taxation Office (ATO) last year for large companies & this year for smaller companies. STP reporting started gradually on July 1, 2018, for employers with 20 or more employees and is now being extended to include employers with 19 or fewer employees with effect from July 1, 2019. Following which, all businesses will be required to be STP compliant. Last week we announced the last call for STP upgrades. If you have still not upgraded to the STP compliant version of your payroll software, please contact us immediately.
- Ensure that you have a secure IT infrastructure in place with back-ups of all important information;
- Update your software to the latest version;
- Ensure that all your licenses are paid for.
7. The way forward
- Assess your performance in FY 2018-19 and identify areas for improvement. Depending on your business performance, you might want to consider revising your strategy for the new financial year;
- Identify any impact your business might have due to a recent change to your industry, business type or location;
- Plan your cash flow as this will help you stay aware of potential cash shortfalls;
- Reassess your insurance policies and ensure they are still adequate for your business.
Consult a tax expert if you need professional tax advice. If you are managing EOFY processes yourself, find out how your accounting software can help you stay on top of your business finances.