End Of Financial Year (EOFY) isn’t just a marketing opportunity for businesses looking to entice business customers to make the most of available tax deductions. It’s also the most important time of the year for business owners to maintain compliance and set their business up for success.
There’s no wonder, then, that tax time induces a certain level of anxiety among many business owners — but it doesn’t have to be that way. In fact, some business owners outsource and automate their EOFY processes to the point that tax time never bothers them again.
If you’re not one of those hyper-organised types and you’d like to be, here’s a seven-point EOFY checklist.
1. Review record-keeping processes
A non-negotiable aspect of EOFY means checking all reports and records are compliant with the Australian Tax Office (ATO).
The ATO requires businesses to keep records for at least five years, while at the same time more businesses are choosing to go paperless.
This is something to consider when changing solutions providers or acquiring new technology solutions.
Tip: If you struggle with managing your expenses and keeping track of pesky receipts or invoices, you can use MYOB Assist App to snap a photo of invoices or receipts and have them automatically uploaded to your accounting software. This also makes it much easier to work with your accountant to maximise any relevant deductions.
Have your accountant review your automatic bank rules and the GST codes assigned to the Profit and Loss and Balance Sheet items to ensure you are lodging accurate Business Activity Statements (BAS). You’ll also want to make sure you’re on top of Taxable Payments Annual Reports (TPAR), Single Touch Payroll (STP) and more, as detailed further on.
2. Check your Business Activity Statements
BAS are designed to help you stay on top of your business taxes on a regular basis and, as such, this is the first key area to tick off on your EOFY checklist. Make sure your BAS lodgements are accurate and up-to-date. If not, attend to your lodgements and arrange an ATO payment plan to help get you back up to speed.
3. Prepare a Taxable Payments Annual Report (if relevant)
Taxable Payments Annual Report (TPAR) is a key ATO reporting requirement for many organisations that make payments to contractors or subcontractors.
In recent times, the Government has expanded the list of industry sectors that are required to lodge a TPAR via the Taxable Payments Reporting System (TPRS). Currently, that list includes:
Building and construction
Government grant providers
Courier services
Cleaning services
Road freight
IT services
Security services
Tip: A TPAR must be lodged by 28 August each year and you can find out more about them via the ATO website.
4. Finalise payroll and super obligations
Next on the EOFY checklist is payroll and superannuation. When it comes to reporting payroll tax and super, employers must use Single Touch Payroll (STP) to automatically deliver this information to the ATO.
An expansion of STP, known as STP Phase 2, sees employers delivering even more information to government agencies in this way. Given the mandatory start date for Phase 2 reporting is 1 January 2022, be sure to triple check your STP reporting is up to scratch.
Reconcile your payroll and get ready to provide 2022 Income Statements to your employees, making sure that salary sacrifice superannuation contributions (RESC) and reportable fringe benefits are handled correctly.
Your super guarantee (SG) contributions also need to be up-to-date. If you have prior quarterly payments outstanding, contact your accountant or bookkeeper for guidance as soon as possible.
You will have up until 14 July to ‘finalise’ your employees’ EOFY payroll information through your STP-enabled payroll software — but this can be finalised as soon as you have reconciled the information.
Tip: Doing all of this correctly means employees will be able to access their income statement online via myGov under the employment tab. If your employees don’t have a myGov account and cannot create one, or do not have a registered agent, they can call the ATO on 13 28 61 and they will provide it.
5. Taking stock: Inventory, assets and liabilities
If your business carries stock, 30 June should complete the stocktake of inventory, so decide on a suitable date and get that marked in your diary. Additionally, if you have adjusted stock quantities and spoilage in your inventory, this should be adjusted as at 30 June to ensure it is reflected in your accounts.
If your business has substantial plant and equipment and you maintain an asset register, review and record any adjustments including description, location, quantity and damage/obsolescence.
Tip: Other liabilities worth taking stock of include customer deposits, gift vouchers and laybys, as all of these can have a significant impact on the value of a business’s holdings and may impact your ability to borrow or sell your business in the future.
6. Complete reconciliations
Part of your EOFY checklist is making sure you’ve got everything ready for reconciliation.
Reconciliation is a process whereby a business owner, manager or bookkeeper compares actual transactions against supporting documentation in order to identify discrepancies, errors or any potentially nefarious activities.
This is an important step in a business’s EOFY processes as it allows management to identify any particular problems before reporting to the ATO, and so giving enough time to adjust or rectify as required.
Review your Balance Sheet and Profit and Loss Statement to show you have completed the following tasks:
Bank accounts, petty cash, credit cards, loans and HP/chattel mortgages (monthly repayments on loans for fleet vehicles) are reconciled
Compare your Accountants Receivables and Payables Reports to amounts shown on the Balance Sheet to ensure none are ‘out of balance’
GST and PAYG withholding accounts are reconciled to the June BAS
Wages and superannuation in the Profit and Loss report are reconciled to the PAYG Payment Summaries
Amounts in suspense have been allocated to the appropriate ledger account or, if unsure, complete a note in the memo to assist your accountant or bookkeeper determine the correct treatment
Personal expenses have not been claimed as business expenses
Material differences to the prior year can be properly explained
7. Prepare for the next financial year
The last part of your EOFY checklist is making sure you’re also ready to hit the ground running for the next financial year. With new tax legislation and an ever-changing economic environment in play, business and tax planning is more important than ever.
We’ve collated the following shortlist of items for you to plan for.
National wage increase — Yet to be confirmed, the month of June often brings an announcement from Fair Work regarding any changes to pay and wages, so keep an ear out for any news from the Ombudsman.
Reporting — As a result of the above along with any other changes you’ve identified coming down the pipe, now’s a good time to update Profit and Loss and cashflow budgets for the year ahead, taking the time to compare budgets versus actuals for this period and applying any forecasts to the next.
Price changes — Based on your updated reports and related planning, it may be time to reconsider your prices or even your pricing model.
Tax planning — Have this conversation as early as possible to make sure you’re in a better position with your taxes come next FY end.
Policies and financing — The EOFY period is also a good time for business decision makers to take stock of their access to finance, repayment terms as well as any other insurance or similar policies that are currently in place and attracting cost.
Software and systems — When was the last time you reviewed your business management platform? This includes all the systems and processes related to your core workflows, such as accounting, payroll and inventory.
Automated, integrated, connected. MYOB has already helped thousands of businesses just like yours to digitally transform, by bringing everything you need to run your business into one platform.
Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
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