10th January, 2020
Online accounting software has revolutionised the way bookkeepers and business owners prepare for End of Financial Year (EOFY). Here’s how you can use MYOB to make tax time easier than ever before.
For busy business owners, simplicity is often seen as a luxury. Particularly during EOFY, which is generally considered stressful at the best of times. And for those who don’t plan ahead, it’s even worse.
That’s because the ATO requires Australian businesses to submit a number of compliance obligations for 30 June 2020 within strict timelines. Failing to plan means you could get caught out and have penalties imposed upon you or your business.
Be as stress-free as possible by keeping your records up to date. To achieve this, implement great systems around your business finances and build diligence into your day-to-day recordkeeping.
To help get your prepared in the lead up to EOFY 2020, here are five tax-time tactics to follow.
Say goodbye to paper filing with innovative tools available in your accounting software, such as the Essentials and AccountRight ‘In Tray‘ which can receive receipts you’ve entered via the Capture App.
These tools enable businesses to automatically receive, store and link electronically formatted bills or receipts, and have the program record the details of the bill with minimal data entry at the same time.
Collate, process and file receipts, paperwork including bank/credit card statements and file chronologically digitally wherever possible.
It’s important to keep records and books clean, so as to minimise the chance of anything going awry and messing up your stress-free EOFY.
Try to avoid using cash as the receipts that prove the spend can be easily misplaced, so opt for bank or credit card transactions where possible. Another solution is to take photos of the dockets as proof of expenditure.
Daily recordkeeping means that everything is kept up to date. If everything is organised, the end of financial year will be much less stressful.
Live bank feeds mean that reconciling accounts has never been easier.
If you’ve unreconciled items sitting in any account, investigate early.
Reconcile any accounts that you can – for example, all clearing accounts should be reconciled back to zero; BAS accounts, superannuation payable, PAYG payable, customer and supplier deposit accounts are all able to be reconciled.
Ideally, you should be able to prove the balance of every account in your balance sheet so that all will be in order if an audit should take place.
Ensure your debtor accounts are reconciled to your general ledger account. If not, you will need to correct this by running a report in MYOB Essentials called ‘Sales Reconciliation‘ or in AccountRight, ‘Receivables Reconciliation Summary‘. This will ensure you have no ‘out of balances’ (the total of your outstanding invoices equals the balance of your trade debtors account).
If you do have an ‘out of balance’, you’ll need to identify why that is and correct it. Check for any sales orders sitting in your accounts and if they’re going to be supplied. If not, you may have to clean these out.
Review whether orders are fulfilled. If the goods have been supplied, the order should be converted to an invoice. Also check to see if the orders are fully paid, as these may need to be converted to invoices too.
Review all debtors in your list and if there are any that are unlikely to be paid. You may wish to clean these out by writing them off to a bad debt account. Generally if an invoice has not been paid after 12 months and you have made reasonable attempts to collect payment, then the debt can be considered as bad.
Although not necessary for EOFY, it may be a good time to review whether your debtors are adhering to payment terms and implement better procedures for payment collection if debtors are falling outside the terms.
It’s a good time to contact outstanding debtors to collect payment too, as they often will pay prior to EOFY in order to be able to claim a tax deduction in the current year.
Your accounting software has made it so much easier to get paid faster with ‘online invoicing’. Not only does it enable you to send invoices directly from your mobile, set invoice reminders, track whether customers have seen, opened or paid your invoices, but to also get paid faster with AMEX, Visa, Mastercard and BPAY by clicking the ‘Pay Now’ option directly from the invoice your customer receives electronically.
This feature also automates your bookkeeping by taking it a step further and closing the invoice once paid in your accounting software for even easier reconciliation.
Like your debtors, your creditors also need to be reviewed and balanced to your general ledger account. This is done by this by running a report in MYOB Essentials called ‘Bills Reconciliation’ and in AccountRight called ‘Payables Reconciliation Summary’ to ensure you have no ‘out of balances’.
If you do have ‘out of balance’ you’ll need to identify why that is and correct it.
Check purchase orders to see that they’re still current. If not you may have to clean these out.
Review whether purchase orders are fulfilled. If the goods have been supplied, the order should be converted to a bill. Also check to see if the orders are fully paid it, as these may need to be converted to bills too.
Review all creditors in your list and if there are any that you are unlikely to pay, then you should delete or reverse them. You may identify duplicate entries while going through this process.
Additionally, you should reconcile your supplier bills against the supplier statements. The outstanding bills on the statement should agree exactly to the bills showing as owing in your accounting file. All supplier bills should be entered to the end of the financial year so that all businesses on an accrual basis can claim the associated tax deduction for the expense.
By following these tips, your EOFY work will be completed sooner and with less stress. You should feel confident that the accounts are an accurate reflection of the business’s financial position.
Are using online accounting software yet? It’s the first step on the path to a painless EOFY this year. Even better, you can Try FREE for 30 days today!