The End of Financial Year (EOFY) is a vital period for businesses in Australia.
It’s the time of year when businesses will organise their financial records, maximise their tax benefits, and prepare for the new fiscal year.
This quick list will cover a few tips that businesses may use to prepare for the new fiscal year.
What Is EOFY?
EOFY stands for End of Financial Year, which ends on June 30 in Australia.
This period is crucial for companies as it involves doing the following:
Finalising Financial Records: This means accurately recording all income and expenses for the year.
Preparing Financial Statements: These reports will summarise your company’s financial performance over the previous year.
Lodging Tax Returns: All businesses are required to submit their tax calculations and payments to the Australian Taxation Office (ATO).
For example, if you’re an appliance retailer, part of your EOFY will typically involve closing your books by ensuring all financial year sales, expenses, and payroll records are accurate.
Then, you prepare financial statements like profit and loss statements and balance sheets.
Finally, you’ll then lodge your tax return with the Australian Taxation Office (ATO), claiming deductions and paying any taxes.
During the End of the Fiscal Year, you may also consider reviewing your company performance and planning for the future—to set new financial goals and potentially adjust budgets.
A smooth End-of-Fiscal Year can help prepare your company for the next financial year’s sales and closing.
Notable Tax Dates
Understanding key tax dates can make the process quicker. Business owners can consider minding these key dates to help facilitate the timely completion of all required tasks and different sales deadlines.
June 30: End of the financial year. All financial activities for the year will typically be recorded by this date.
July 1: Start of the new financial year. Self-employed contractors can lodge their tax returns from this date.
July 14: Deadline for providing PAYG withholding payment summaries to employees.
August 28: Due date for lodging taxable payments annual report for payments to contractors.
October 31: Deadline for lodging individual tax returns.
May 15: Deadline for lodging a company’s income tax returns if they’re using a tax agent.
Quarterly BAS (Business Activity Statements) and Superannuation Payments: Every July 28, October 28, February 28, and April 28.
Please note that this is not a comprehensive list. Events or timelines may change each EOFY. Therefore, it’s important that you keep up to date with the due dates on the ATO website or consult your tax agent.
Helpful Tips For EOFY
The End of the Fiscal Year is an important time that can help businesses and retailers stay ahead of their tax obligations.
Business owners can use this checklist for the following:
Complete bookkeeping
Lodge tax returns
Plan for the new fiscal year to keep their business compliant
Potentially avoid penalties
Making the proper preparations can potentially make fiscal closing easier.
Review Your EOFY Checklist
Fiscal year-end preparations can be hectic, but the following tips can help ensure you have all the necessary information for a smooth tax return process.
Here’s what your checklist might include.
Financial Statements: You will generally need a summary of your income and expenses (profit and loss) and any asset purchases or improvements (for depreciation claims).
Taxes Reports: This can involve reports for PAYG withholding, Fringe Benefits, and Goods and Services.
Recordkeeping Essentials: Consider compiling all of your income statements, expense or purchase receipts, bank statements, and a record of debtors and creditors.
Superannuation: This will help ensure you’ve met all superannuation requirements.
Digital Backup: Consider creating digital copies and backing them up securely.
Read Up On Any Tax Changes
Tax rules can change between financial years. For example, new tax breaks might be available to potentially save you money, or there could be new rules you need to be aware of at tax time.
Here’s how to stay in the loop.
Check the ATO website: ATO regularly updates its website with new taxation changes.
Talk to CTAs: They can explain any changes and how they apply to your business.
Lodge Any Necessary Income Tax Returns
All retailers will typically need to lodge a tax return, even if they didn’t earn income. How you lodge your returns will depend on your business structure.
Sole Trader: Sole traders can use the myTax website or a registered taxation agent. Afterwards, you can report your business income and deductions on your individual tax return.
Partnership: The partnership lodges a separate return, and each partner can report their share of the income individually.
Company Or Trust: These generally require separate tax returns lodged by a CTA or using specialised software.
List Down Any Potential Tax Deductions Or Concessions This EOFY
You can claim deductions for most business expenses, like the following.
Setting up a shop or website
Vehicle expenses
Travel
Office supplies
Other different products (as long as they directly relate to earning your trade)
Consider prepaying some expenses like rent or insurance near fiscal year-end. This allows you to request and claim the tax deduction in the current financial year.
Business owners can also check if they’re eligible for tax concessions during the end of the financial year.
Meet Superannuation Contribution Limits
As a business owner in Australia, you can contribute extra to your employees’ super accounts before June 30th, which can help reach your retirement goals faster.
The good news is that these contributions can also lower your taxable income.
The general concessional contributions limit for the 2023/24 financial year is $27,500.
Compile Stocktake And Asset Records
Toward tax time, many businesses will typically conduct a stocktake. This can help them determine the value of their stock for business and tax purposes.
As a business owner, consider conducting a stocktake during tax time to potentially maximise your tax refund.
This will include maintaining accurate records of asset purchases and disposals for depreciation and capital gains tax purposes.
Business owners will also typically record each item’s description, price, discounts, who conducted the stocktake, and the valuation method.
Go Over Your Current Insurance Coverage
EOFY is an excellent time to review or upgrade your insurance policies.
Consider checking whether you’re paying enough coverage for both personal and business insurance.
You can also review essential coverage like workers’ pay or compensation, public liability, and tech or asset protection.
The right insurance can protect your business, customers, and income!
Conclusion
The End of Financial Year can be stressful for business owners, but with proper planning and organisation, it doesn’t have to be.
With these tips and tricks, you can confidently navigate the EOFY and set your business up for continued success.
By planning now, you can ensure an even smoother process as the End of Financial Year closes on June 30!
For businesses or retailers looking to make strategic investments and tap into more growth opportunities during this time, it is important to have access to the right financing options. A Business Loan with Lumi is something worth considering. Small business loans and lines of credit could provide the ultimate solutions for businesses to use the extra money with flexibility and convenience.
If you’re ready to apply for a Business Loan or Line Of Credit, click here.
Got more questions? Get in touch with our friendly team via phone at 1300 005 864 or email sales@lumi.com.au.
Disclaimer: We try our best to fact-check all information and keep it up-to-date, but this can not always be guaranteed. All of the information shared is for general use only and should not be considered personalised financial advice. Make sure to consult an accredited broker, accountant and/or tax agent for personalised advice on matters related to your business’s or personal finance.
