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The end of the financial year is one of the busiest periods for many business owners. Having a year-end planning checklist, gathering all the appropriate documentation and getting your finances in order will put you in good stead for the new financial year.
The end of the financial year (EOFY) can often feel overwhelming for business owners. With a myriad of tasks to complete, ranging from tax returns to stocktakes, it's important to have an effective EOFY checklist in place. Our comprehensive guide will help you understand when the financial year ends and how best to prepare your business for the new financial year.
When does the financial year end, you might wonder? Or when does the fiscal year end? In Australia, the EOFY is on June 30th. This date signifies the close of the financial year and the start of the new financial year from July 1st. Therefore, the key period for businesses to prepare for is the lead-up to June 30th.
Here are the key tasks to include on your end of financial year checklist:
Double-check that your pay transactions match what’s recorded on your payroll register. This is a crucial consideration at the end of the financial year because it ensures your tax return is accurate and helps determine if you’re over the threshold for payroll tax.
Late superannuation payments aren’t tax-deductible, which means if you overlook any employees such as contractors or you need to make corrections after year-end, you’ll most likely miss out on tax deductions. Make sure to review all super payments in early June so that everything is paid appropriately, and you can take advantage of deductions.
Make sure all your employees’ salaries are in line with relevant awards and any other statutory requirements. Underpayments or incorrect payments could see you hit with penalties.
Keep in mind that making extra purchases at the end of the year doesn’t always equate to a bigger tax return – it only reduces your taxable income by the total of your business expenses. However, if you’re planning to invest in equipment or resources anyway, doing so before tax time could be a good idea.
Check your current insurance policies (such as workers’ compensation insurance) and get your new policies in order ahead of the new year. If your business operations have changed at all over the past year, don’t forget that you may need to take out extra or different insurance policies to ensure you and your workers are appropriately covered.
End-of-year pay as you go (PAYG) summaries need to be issued to staff members by 14 July. Just make sure your payroll totals are reconciled first before you provide payment summaries to help your employees lodge their tax returns.
Your quarterly BAS is due by the end of June. You’ll also need to submit your annual report to the Australian Securities and Investment Commission along with your solvency declaration if you’re set up as a company.
If you received any national, state and territory government grants or payments, such as JobKeeper, visit the ATO website to find out whether they should be included in your tax return.
Now is a good time to review your finances with an accountant, bookkeeper or tax adviser. Look at whether you met your targets this year and if you need to make any changes next year to manage potential shortfalls, ensuring you can still pay employees and suppliers.
Evaluate the need for contract employees
Consider hiring contractors with relevant experience towards the end of the financial year to make sure you have your paperwork organised on time and are meeting all your tax obligations. The investment in extra staff will help ensure your business is as tax efficient as possible and could save you money in the long run.
As the end of financial year checklist gets ticked off, it's time to prepare for the new financial year. Plan your budget, set strategic goals, and identify areas for potential growth. The new financial year is a perfect opportunity to rethink strategies, innovate, and take your business to the next level.
The end of the financial year doesn't have to be a stressful period. With an effective EOFY checklist, you can manage your tasks seamlessly and position your business for success in the new financial year. Remember, the key to a smooth EOFY is preparation. Start early, stay organised, and keep your eye on the bigger picture of your business growth.
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