Preparing Your Small Business for the EOFY Reporting Season
With June 30 fast approaching, it’s time to ensure your small business is ready to meet the requirements of the EOFY reporting season.
The end of the financial year (EOFY) can be a challenging time for many small businesses. While you need to maintain normal business operations, there’s the added pressure of collating financial records, setting plans for the new financial year and complying with tax obligations.
You can make life a little easier for your business by introducing strategies to keep on top of your obligations throughout the year. These strategies can also help you wrap up the current financial year while setting up your business for more success in the new year too.
How to get your small business EOFY ready
Review your record keeping practices
A good record keeping system is a must for every business. At a minimum, your record keeping system should substantiate the activity you lodge in tax returns, record all income and expenses and make it easy to identify important financial information.
Your record keeping system needs to be easy to use and easy to update, so you avoid the last-minute EOFY scramble. Ensure you have a system to collate income, expenses, depreciation schedules, capital gains information and other records as you go, throughout the year.
It’s also important to regularly backup and store your records securely, to prevent privacy breaches or loss of data.
Know your deductions
It’s vital to understand the tax deductions you may be able to claim for your business, as well as when and how you can claim. For instance, it’s important to write off any debtors or assets before the end of the financial year to claim a tax deduction for these in your tax return.
You may be able to claim deductions for your business if you've incurred:
- Borrowing expenses
- Interest costs on your investment loan
- Travel expenses
- Capital works expenses
- Costs for repairs
- Expenses for property management and advertising
The Australian Taxation Office offers general advice to assist small business owners to prepare tax returns and identify relevant tax deductions. For more specific advice, it’s best to seek the assistance of a professional, such as a tax agent, accountant or financial advisor.
Understand changes to tax legislation
It’s important to understand changes to tax legislation and the potential impact on your business and your EOFY reporting requirements.
One such change relates to plant and equipment deductions, affecting investors who purchased second-hand residential properties after March 9, 2017. The changes limit the depreciation claimable on existing plant and equipment assets in residential investment properties. However, these changes do not apply to new plant and equipment subsequently purchased and installed by the investor.
These changes also have no impact on the existing rules regarding an investor’s ability to claim capital works deductions. Capital works deductions can still be claimed for the wear and tear that occurs to the structure of a property, including any structural improvements made during a renovation.
As a small business owner, it’s crucial to understand changes to tax legislation and how these relate to your business and investments. When in doubt, it’s always best to seek professional advice to ensure you are complying with current and future changes to tax law.
Review your business operations
The EOFY reporting season is the ideal time to review your business operations to identify areas for improvement. As well as reviewing your finances for tax purposes, it’s also a good time to take stock and make sure you are still on track to meet your business goals.
Some questions to get you started include:
- Have you met your targets? What you can do differently next financial year?
- Is your business structure still fit for purpose?
- Does it align with your business operations, vision and plans?
- What are your goals and priorities for the new financial year?
- What strategies do you have in place to meet these?
- Do your business and marketing plans need updating?
- How can you introduce efficiencies, systems and processes to improve your business?
- Do you have the right insurances in place?
If you find yourself struggling to answer these questions, it might be time to talk to a professional who can work with you to ensure you’re getting the most out of your business.
Seek professional financial advice
It’s difficult to stay on top of your business while also keeping up with the constant changes in the tax and financial systems. Engaging professional help can keep your business on track, ensure ongoing compliance and get you ready for any new changes slated to begin as of July 1.
When seeking professional advice for your business, it’s vital you only engage registered and accredited professionals (such as tax agents, accountants or financial planners). Utilising registered professionals will reduce the risk of unsound advice, maximise your profits and help set your business up for success, in this financial year and beyond.
If you need to prepare your business for the upcoming EOFY reporting season, contact Vision Property & Finance to discover how our financial planning services can help. Give us a call on 02 8354 3000 to reach Sydney’s office or 02 4014 1999 to talk to someone in Newcastle’s office. You can also contact us here.