Things To Consider For A Smooth End of Financial Year

The end of a financial year doesn’t have to be as scary as most business owners think. With a small amount of planning throughout the year before the 30th June rolls around, the end of the financial year can be a nice smooth process without any stress whatsoever.

Here is a bit of a checklist of some things that might need to be considered by your business for the end of the financial year:

• Stocktakes – if you hold inventory in your business it is a good idea to start planning your stocktake now so that it can be completed prior to the 30^th June. Your stock on hand figure as at this date is very important and can make a huge difference to the profit figure that gets reported in your tax return so please take some time soon to work out a stocktake attack plan and implement it.
• Aged Receivables – Now is a great time to start going through any customer invoices that have been issued and you think will not be collectible so that they can be written off as a bad debt. Writing them off now means that your income will not be overstated for the year. Also, if you are on an accruals basis for GST then it also means you can claim back the GST originally paid on these invoices in the June quarter BAS.
• Asset purchases – now is a good time to think about purchasing any assets that your business may need to get the tax and GST deduction into this financial year. Currently, any asset purchased that is less than $20,000 can be claimed as an immediate tax deduction so if you have the available funds and are thinking about purchasing something, then now is the time to do it. Also, if you have already purchased any major assets during the year, please ensure you have a copy of the tax invoice to support the purchase and the GST claimed and to assist with depreciation purposes.
• Supplier invoices – if cashflow permits then now is the time to try and pay as many supplier invoices as possible to get the deduction for them in this financial year and to claim any applicable GST on the June BAS.
• Taxable Payments Annual Report – If you are in the Building and Construction Industry and need to submit a Taxable Payments Annual Report (TPAR) this year for any contractors that have performed work for you then now is the time to go through all of your information to ensure you have the correct details for them. You need to make sure you have their current ABN, full name and address and also know whether they are registered for GST or not. Also, it’s a good idea to check the amounts that have been paid and reported in your accounting software during the year to those that will be included on the annual report to the ATO so that there are no discrepancies between the two.
• Payroll – now is a great time make sure all of your employee details and payroll information is correct and up to date so that there is no delay in the preparation of the PAYG Payment summaries which are required to be given out to employees no later than the 14^th July. Details such as their Date of Birth (DOB), address and Tax File Number (TFN) as well as their email address if sending electronically, are all good things to ensure are up to date and complete prior to the end of the financial year.
• Superstream – the deadline for being superstream compliant is the 30^th June 2016 so if you have employees and pay superannuation guarantee then you need to make sure you have set yourself up to pay and report their superannuation contributions in a superstream complying manner before this date. If your default fund does not have its own clearing house that is superstream compliant then another good option is the ATO small business superannuation clearing house. Certain software programs like Xero, QBO and the live versions of MYOB are all superstream compliant as well.
• Loans and Hire Purchase contracts – If you have entered into any new loans or Hire Purchase contracts during the year it is good practice to make sure all relevant documentation for these is available for your accountant or bookkeeper for reconciliation purposes and for them to calculate the applicable interest to be taken up as a deduction for the year.
• Livestock – if you are a Primary Production business and hold livestock then now is a good time to take a head count and think about any births and deaths that have occurred during the last financial year so these figures can be readily available when your tax return needs to be completed.
• Log Books – If you haven’t already, a complying log book needs to have been completed for a period no less than 12 weeks to substantiate any motor vehicle expense deductions made in a business. It is best practice to ensure that you have a log book that is up-to-date to verify your business vs personal use of your motor vehicle expenses. If you have already completed a log book in the past it will be valid for a period of 5 years unless your circumstances have changed in this time such as the purchase of a new vehicle or different working conditions. If your log book is more than 5 years old a new one needs to be completed for the year.

Please note that it is also recommended to discuss the above points with your bookkeeper or accountant prior to the end of the financial year as they might have some additional suggestions on what is most relevant for your business.

Thinking about some or all of these items now will save you a lot of headaches and time sifting through old paperwork later down the track.

Happy End of Financial Year!