Preparing for the end of financial year means not only calculating income tax and BAS payments, but determining the financial health of your business. I always recommend that my clients start preparing for EOFY after the March Quarter BAS has been finalised and they make an appointment to meet with their accountant. If you are in a situation where you happen to have a lot of profit, it’s best to tax plan during the last quarter as once 30 June arrives it will be too late.
When it comes to EOFY, many business owners are quite unprepared and find themselves in a mad panic rush right at 30 June. Here are my six tips to help you with tax preparation and get ahead of the game.
Now is the time to ensure you have all your employee records in order to avoid the frustration of going to prepare your Payment Summaries only to discover that you are missing important details for your employees.
Make sure that you have recorded these key points for any employee who has worked for you throughout the financial year:
If you are missing any of these, contact the employees now to update your records. You won’t be able to prepare payment summaries if you are missing any of these details.
Make sure that you have termination dates entered for any employees that have ceased working for you during the year so it’s reflected in their payment summaries.
Even if you still have pay runs to process before 30 June, this is something you can start right now. If you have a balanced payroll at the end of May, then when it comes to finalise the year after that last pay run in June, you will only have June figures to check. It really takes the pressure off at a busy time of year and helps ensure you meet ATO issue date requirements for payment summaries.
Reconciling your payroll reports to your Profit & Loss Statement and your Balance Sheet is a very important step which is often overlooked by business owners. It’s a few simple checks as shown below that helps to avoid queries from your accountant or an ATO discrepancy query down the track.
Tip: A common error that can cause your payroll to be out of balance is coding a spend money or a purchase transaction directly to a wages account. Anything to do with payroll must always be processed via a process payroll transaction.
You can only finalise your payroll for the year once you know there will be no further pays to be processed.
Once the last payroll has been processed, review your bank statement as at30 June to make sure no payroll transactions slipped through that have not yet been recorded (eg. a bounced pay, a last minute bonus payment, or a salary sacrifice superannuation payment. Remember, salary sacrifice superannuation is reportable and needs to show on your payment summaries).
Review that last month to make sure all is in balance, then prepare payment summaries. Be sure to keep copies of everything in a safe location as you are required to keep payroll records for seven years.
I recommend you keep the following reports digitally stored:
Complete these tasks before you finalise the financial year:
If you are using MYOB Essentials then this is taken care of for you automatically. But if you happen to be using some of the other MYOB accounting software products, you do need to make sure you have downloaded any updates.
Once you feel you have completed everything that you can, arrange for your accountant to be invited into your MYOB file. Email any documents your accountant will need to be able to start on your financials.
At the very least you will need to send:
Hopefully these steps will help you to have a happy end of financial year.