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TAX •  23 FEBRUARY 2021 • 5 MIN READ

Are you prepared for the end of financial year in Australia?

A man wearing earphone standing in front of the stairs

The end of financial year date in Australia for most businesses is 30 June. Now is the time to reflect on what has been, and what will be. It’s going to be a busy few months but try implementing even one of our suggestions – it could save you money/tax.

Last minute stuff

Get a good accountant – it’s not too late!

Accountants help make sense of your finances and help prepare your accounts and tax returns at the end of financial year. You’ll want to ensure you are paying the right amount of tax, get an idea of the size of your bill and when you need to pay it, as early as possible.

If you’re concerned about fees for accounting services, here are two tips:

  • The easier it is to find and interpret your financial information, the cheaper your accounting bill will be. This is a reason to get a good system in place
  • Ask your prospective accountant for a fixed price quote so there are no nasty surprises (we only work on fixed fees)

Do not underestimate the difference to your overall tax position that an accountant can deliver!

Debtors

Go through your debtors (people who owe you money) before the end of financial year. If you’re sure they are a bad debt and will never pay you, write them off now.

You don’t want to pay tax on income you’re unlikely to receive. Read more on 7 top tips business owners should know to to reduce your tax bills.

Fixed assets

Go through your list of assets (fixed asset register) and make sure that you have, and are using, every asset listed. Pay particular attention to electronic devices which you may have since upgraded.

You’ll probably find items that are no longer used, have been thrown away, stolen, or sold, or traded in for an upgrade.

Write them off now if they have not been written off already.

Vehicle logbook

Is your vehicle logbook up to date – have you been recording all business and personal kilometres for at least 12 weeks? Without a logbook determining your business/private use, you are restricted to how you can claim your motor vehicle expenses, which can make a big difference at year end.

Each logbook can be used for up to five years provided there are no significant changes in the vehicle’s use, but you may start a new one at any time. Read more on how much you can claim for your motor vehicles.

Creditors

Make sure that you are carefully recording all your creditors (people the business owes money to).

Recording all liabilities accurately can reduce your tax bill.

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Prepare for next year 

Bookkeeper

Think seriously about using a bookkeeper in the new financial year. If you’re not confident about what goes where, or are time-poor as most business people are, then a bookkeeper can help input information into your system correctly. You may be surprised how little it can cost – what takes you four hours may take a bookkeeper only two. It will certainly free up your time to do something more enjoyable. Do some research online or ask your colleagues/mates – there is no shortage of good people out there.

Beany offers bookkeeping services (including bank reconciliation and preparing for BAS returns) so you can focus on running and growing your business.

Accounting software

Using an accounting software package that does what you need is vital to businesses. If you haven’t updated for a while, or are new to business, you’ll be astonished at what’s available these days. The start of a new financial year is the perfect time to switch to Xero (or other accounting software). Almost all of our clients use Xero. Select a Xero pricing plan that works best for you (you can easily upgrade or downgrade later if needed).

The Xero Cashbook or Xero Ledger (available only through accountants) may be perfect if you don’t need all the bells and whistles.

Business and tax structures

Do you need all those entities and tax structures? Maybe you need two companies and three trusts – maybe you don’t.

Although there are short–term costs to closing entities down, it is well worth it to stop ongoing compliance costs.

Business software

New or upgraded business software seems to pop up every day – is there anything you can automate to save time and money? Can your apps be integrated into your accounting system, or with each other?

Colleagues and friends may provide useful nuggets of information.

Keep things simple

Business can get complicated and when it does, accounting records and systems often follow suit.

  • Avoid burdening yourself with multiple companies, trusts, and structures. They are rarely worth the hassle.
  • Only use multiple general ledger codes for different items if the different codes genuinely help you make better business decisions. Sometimes more information leads to poorer decision-making or less business agility.
  • Set up a system for recording your business income and expenses directly, in one place.  Some businesses keep paper invoices, which they then enter into a spreadsheet, which then gets sent to an accountant, who inputs it into their accounting software. If this works for you and your accountant, that’s fine, but there are more efficient ways of doing this.

If you’re adding complexity – which will, inevitably, add cost – then make sure you’re getting a good return. Sometimes it’s worth it, sometimes it’s not.

Go digital

Digitise all important paper documents and save them, along with your relevant electronic documents, in an orderly way. Key documents to save include:

  • Fixed asset invoices or large repair bills
  • Business insurance documents
  • All new loan and lease agreements
  • All sale and purchase agreements
  • Any legal bills
  • Year-end bank, credit card and loan statements

Ideally, you’d save them to your accounting system, but there are alternative solutions, such as Google Drive. Whatever you choose, aim for a product that is easy to use and secure, yet shareable.

It’s also helpful if you add detailed descriptions on any business transactions – your accountant will appreciate it!

Who are Beany? 

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant would. ​

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.

Kim

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