The end of the financial year (EOFY) is a busy time for small businesses. So we’re here to make June 2019 much smoother for you with answers to some of the most common EOFY questions.
1. What documents do I need to give to my accountant so they can prepare my tax return for end of the financial year?
The exact documentation you’ll need will depend on your circumstances, including your business structure. But here are some common documents that you may need:
- Your accounting software’s data file — or access to your accounting documentation online (if you use Xero, MYOB, QuickBooks or a similar accounting program, you can easily grant your accountant access to your records)
- Records of all the interest you and your business earned from all accounts (not just business accounts)
- Bank statements for your business accounts and any other accounts that are connected to your business operations
- A profit-and-loss statement and/or your balance sheet (if you supply these, you shouldn’t need all of the above documents)
- Payment summaries and/or Centrelink income payment summaries (if relevant)
- Copies of all the Business Activity Statements (BAS) your business submitted and the paperwork used to prepare them (if you’re registered for GST)
- Superannuation records
- Statements from your brokerage if you own shares or other similar investments
- Your health insurance statement
- A record of all your expenses (whether that’s a spreadsheet listing all the expenses or a file containing the invoices/receipts for each payment)
- Records of any assets that you purchased or sold during the financial year
- Details of any bad debts that you’ve written off
- Your motor vehicle log book and/or travel diary if you wish to claim travel expenses (a travel diary should contain details of the method and cost of travel, the cost of meals and accommodation, the fee for any conferences attended and any expenses incurred as a result of attending business meetings)
- Your home office log if you wish to claim expenses incurred from running a home office (this should cover at least 4 weeks)
2. When should I make an appointment with my accountant?
Your tax return is due on 31 October so you can theoretically meet with your accountant any time between 1 July and the end of October. However, you’ll need to wait for each of the following to be completed before you book in with your accountant:
- Account reconciliation to 30 June — usually this can’t be completed until you’ve received all your bank statements and a notice from your super fund and you might not receive these for a month or two after EOFY
- BAS and Instalment Activity Statements (IAS) — all of them need to be correctly lodged
- Your EOFY stock-take and valuation (if you’ve got stock on hand)
If you expect to receive a refund, it’s best to schedule your appointment as soon as possible after these things have been completed so you can get your refund as early as possible. If you don’t expect to receive a refund, October is a great time to make an appointment.
If a tax agent submitted your tax return last year, you can take advantage of that agent’s special lodgement program, which enables them to lodge client tax returns after the normal due date. If you’re using a tax agent for the first time or are switching to a different agent, you’ll need to contact your chosen agent before 31 October if you wish to take advantage of their special lodgement program.
3. What expenses can I claim on my tax return?
Your accountant will need to advise you on the exact expenses you can claim but here are some common expenses you may be eligible to claim:
- Advertising and marketing
- Your website (fees associated with creating or updating your website as well as hosting fees and domain name charges)
- Bad debts
- Loan interest
- Business travel (provided you kept a travel diary)
- Business motor vehicle expenses such as petrol/LPG, registration, maintenance and insurance
- Home office and/or dedicated work office
- Insurance such as workers’ compensation, business, professional indemnity and public liability
- Repairs to machinery and tools, etc.
- Equipment hire or purchase
- Business phone
- Accountancy and bookkeeping
- Expenses incurred in lodging your tax return
4. What other bookkeeping jobs do I need to do by 30 June or soon after?
- Generate employee payment summaries — you need to send these to your employees by 14 July
- Prepare a Taxable Payments report for the ATO (if your business is in the construction and building industry)
- Enter the minimum wage increase into your accounting software or payroll system
5. How can I reduce the amount of tax my business pays?
Subject to advice from your accountant, the following may reduce your tax liability:
- Pay fourth-quarter super contributions before 30 June instead of waiting until 28 July
- Pay upcoming expenses like rent, loan interest, business insurance, car insurance, memberships and subscriptions before 30 June
- Make a voluntary super contribution
- Buy any equipment that you need before 30 June — and you can often save money by doing this too if you take advantage of EOFY sales
- Donate to a registered charity
6. Next steps after end of the financial year activities
If you’re expecting to have to pay tax this year and are worried about where you’ll find the cash, consider whether invoice finance might be the right finance option for your business.
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And if you found tax time challenging or stressful, visit our blog next month for some great tips on how to get the upcoming financial year off to a great start so your end of the financial year 2020 (EOFY2020) runs much smoother.