EOFY business accounting tips
With 30 June looming, it’s time to start getting your business accounting prepared for the end of the financial year (EOFY).
We know that for many businesses it’s been a challenging twelve months, but it’s important that you don’t miss out on tax minimisation opportunities.
You want to make sure you take advantage of as many deductions as possible.
We’ve put together a list of tips to help you achieve the best outcome this EOFY. By taking action now, you can minimise last minute stress.
Keep records up to date
We say it all the time, but keeping your financial records up to date is a critical part of business accounting.
You need to make sure you have access to all your invoices, expenses and deductions, asset records and bank statements.
Utilising a cloud based accounting system such as Xero can help streamline your record keeping and assist with regular bank reconciliations and reports.
Your records need to also include information relevant to your activity statements, employee super contributions and any GST obligations.
If you haven’t already started getting this information organised, we recommend it be one of your first tasks, as you can quickly identify areas that need additional attention.
Write off bad debts
If your business is registered for GST and you pay on an accruals basis, you could make a tax deduction claim for bad debts.
The claim could provide you a refund on GST that you have previously paid, as long as you include the debt in either your BAS for the June quarter or your annual GST Return.
You must make sure that the bad debt is written off before 30 June and that you can provide evidence that it was irrecoverable.
You also need to retain all proof relating to your attempts at recovering the debt.
Understand your deductibles
As a business owner, it’s possible that you will have some mixed-use expenses, so it’s important that you keep track of all your deductibles.
While your business expenses are likely to be clearly reported through your accounts, anything that is mixed-use, being both business and private use, could also be applicable and provide you with additional deductions.
For example, if you have used your personal vehicle for commercial purposes or your phone is both your personal and business contact number, you may deduct the business component.
In this instance you will need to have a log book or diary as well as any receipts that indicate the costs involved.
Bring forward expenses
Another strategy to help reduce this year’s tax obligations is to bring forward some expenses.
If you have invoices due in July or August, you could consider processing these payments before 30 June to help lower your taxable income.
If your cash flow supports purchasing new equipment or a company vehicle, this would also be beneficial as you could access the temporary full expensing measures.
These measures were included in the October 2020 Federal Budget and are an extension to the instant asset write-off.
“Businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. The eligible new assets must be first held, and first used or installed ready for use for a taxable purpose, between 7.30pm AEDT on 6 October 2020 and 30 June 2022.”
Seek professional advice
We understand that EOFY business accounting can seem daunting. But you can alleviate the pressure by seeking professional service providers to help you.
The team at North Advisory is here to simplify the process of meeting your tax obligations this EOFY. If you’d like to find out more about how we can assist, please contact us today.
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Don’t hesitate to contact us if you’re ready to streamline your financial management with tailored solutions. Your business’s success is our primary focus. Fill in the contact form or call us to book an initial 30-minute chat.
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