With June 30 right around the corner, many of us start making lists of things to do before the end of financial year. Others might start scratching their heads wondering what should be on that list and where to start.
Checking bank statements, clearing accounts, payroll, reporting, stocktakes, outstanding bills and invoices, there’s certainly a lot to do. If just the thought of taking on any of these tasks has got your head in a tailspin, fear not! We’re here to help.
In this blog post, we’ll cover 10 things to do before the end of financial year. This list will help give you a place to start and work as a basis for getting yourself organised.
As the age-old saying by Dale Carnegie goes, “An hour of planning can save you 10 hours of doing”
1. Review Your Bank Statements
No matter the size of your business, one of the first things you should do is reconcile the bank accounts against the bank statement. This simple task helps determine if the bank balance in your financial software matches your bank statement accurately.
This is an important step to carry out on a regular basis, not just at tax time. Business operating accounts, savings, loan, and credit card accounts should all match up to a statement and the balance sheet. Any discrepancies should be investigated and rectified.
2. Review Clearing Account balances
Integrated payment gateways or point of sale software ie: Square or Pinch Payments, are usually linked to your financial software via “clearing accounts”. As transactions frequently move in and out of these accounts, the balance of any clearing account always comes back to $0.00.
Unless you know there’s been a delay in funds clearing the account, the balance at 30 June should be back to $0.00. If it isn’t, now is the time to figure out why. Sometimes issue arise if the payment gateway does not integrate correctly with your financial software. You would be well advised to talk to a professional if this problem occurs.
3. Review outstanding Debtors
Cash is king in business and if you’ve got a list of outstanding invoices owing to you, its time to chase them up and get that cash in the door. Take some time out to review your list of debtors. Are you likely to receive the outstanding monies or not? If you know that you can’t collect the money because the business has gone bankrupt or you just can’t seem to contact them, make sure you finalise these outstanding invoices by pushing them to bad debts or creating a credit note.
Chasing invoices can be a pain, but there are a few things you can do to make it easier, such as setting up automatic payment reminders or making it easier for customers to make payments.
4. Review outstanding Creditors and Business Expenses
Have you got any outstanding bills that need to be paid? If cash flow allows for it, any payments you make on those business expenses now, will reduce your taxable income. A closer look at your debtor list might reveal some double-ups, un-allocated credits, or bills in dispute that you might have forgotten about. If that is the case, you should action this by allocating those credits or create a new one for bills that won’t be paid or remove double-ups.
Have you accounted for all your business expenses? Ensure that all cash transactions or purchases made from a wrong account, such as a personal credit card are entered into your financial software. This will ensure the expense and GST (if applicable) is all claimed in this financial year.
While you’re reviewing your business expenses, it’s a good time to evaluate if there are any areas of the business where spending has been unusually high. Can you make any savings by approaching suppliers for a better rate, or looking elsewhere? It doesn’t hurt to ask and will only work to improve your bottom line.
5. TPAR – Taxable Payments Annual Report
If your business needs to complete a taxable payments annual report, now is the time to start preparing. Take a moment to ensure all the information in your system is complete and correct. This will save a lot of time down the track.
Take a few minutes to double check contractors: business name, ABN, GST status, business address, email address and phone number.
Next, ensure that all contractors transactions report correctly. Depending on the software you use, you may need to make these transactions reportable. Checking the details now will save time on preparation of your TPAR.
6. Complete a Stocktake
Whether you’re an eCommerce/ retail store owner, sporting club, cafe or a tradie with inventory, completing a stocktake before EOFY is essential. Not only does performing a stock count ensure your records are accurate, but it can also identify slow-moving or damaged stock, alert you to theft and inefficient processes and avoid over-stocking.
With those points in mind, make sure that you schedule a stocktake before the 30 June rolls around.
7. Organise your paperwork
“Good order is the foundation of all things” – Edmund Burke
Organisation just makes sense. It free’s up time for other money-making tasks.
Making use of your financial software and other digital applications is one of the easiest ways to keep your receipts, tax invoices, and other relevant documents in order. Apps such as Dext, Hubdoc, or Myob Capture are great for this. Otherwise, try making a folder on your computer and getting into the habit of digitally storing your paperwork. Here, you can store motor vehicle tax invoices, finance documents, insurance documents, payroll documents, and more.
Action this now if you haven’t already done so. It saves a lot of time and unnecessary stress down the line.
8. Review Your Payroll Reports
This is a big one. Make sure before year-end, set time aside to review your payroll reports. Start out by checking your payroll clearing or wages payable account. Whichever account you use to clear your employees net pay, the balance should be $0.00. If you find a balance in either of these accounts, investigate whether you missed paying a staff member or if the payroll transaction was coded incorrectly. Coding wages paid to wages and salaries expense account is a common error.
Next on the list is Superannuation Payable. Does the balance in this account match the figure in the superannuation expense account for the quarter? If it doesn’t, have you missed a payment from a previous period o,r has a payment bounced back from a super fund? In either case, these payments will need to be processed before year-end.
It is also important to know, that for employers wanting to claim a deduction in this financial year, Super Guarantee contributions must be received by the superannuation funds by June 30. The deadline for payments will vary with each software and from fund to fund, so make sure you’re aware of these deadlines before the end of June.
9. Talk to your accountant about Tax Planning Now’s the time to make an appointment with your accountant and discuss all things tax planning. Whether or not your business is thriving or struggling to make a profit, your accountant can give you some great insights. They may help make decisions on big asset purchases, potential investment opportunities, and super. Planning out the details now can potentially save you money on tax and help guide your business decisions into the new financial year.
10. Get up to date with Software and Compliance changes
Last but not least, let’s talk about changes in Software and compliance. Are you prepared for upcoming changes to Single Touch Payroll (STP) and super? How will increases to super and or potential minimum wage rates affect your cash flow? Is your software set up correctly to account for these changes and compliant with changes to STP reporting?
Now is the time to do your research. Chat with your accountant or bookkeeper so you’re aware of any relevant changes coming, and what they could mean for your business in the new financial year
If you action each of these key points, planning around tax time will become a whole lot easier. If you’re looking for more EOFY tips, be sure to follow our Instagram.