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	Articles Blog Business Financials – Small Business End of Year Checklist in Australia Details Published on Thursday, 30 May 2024 10:34 With the end of the financial year approaching, in Australia, it is the best time for small businesses to prepare by reviewing their business, accounts and potential tax results using a Year End Checklist.. Planning for the end of the financial year is an ongoing part of running a business, and it is crucial to stay updated and continually review and prepare for the end of the year in order to finish strong. Here is your checklist to work on – do 1 or 2 a week to be ready by 30 June or early July! 1 Accounts in Order Keep your accounts up to date as soon as possible – and best – as you go weekly with current modern software which has moved into the cloud, and you get your bank feeds streaming the data for you so you can set up easy rules to speed up data allocation, meaning the task is less a burden each year! If you have questions, call me for FREE discussion – 0407 361 596! 2 Where are you at? Review your Profit and Loss and Balance Sheet – read them! Want to understand them? See our explanation Profit and Loss and Balance Sheet. Check - are cost of sales in proportion to sales – if you sell product – work out the margin – what margin is typical of YOUR industry? Is there a profit? If not – are expenses too high? Check - are sales declining/struggling? If there IS profit, but cash is tight – are trade debtors (accounts receivable, clients who own you) climbing – look on your Balance Sheet? Not sure? 3 Review Financial Plan and Goals Did you meet sales goals? Is it clear why? What can you do to improve? Did you improve profit? Did you lower expenses? 4 Tax Plan Have you too much profit? This could mean paying more tax. If you are selling, a good profit is essential to be attractive to a buyer. But if not selling – maybe some expenses can be made in June – stationery, stock, pay superannuation early instead of in July – ask your accountant or us for tips. BUT – be careful – high-cost purchases such as equipment, vehicles or furniture will NOT always be expensed and reduce your profit – they may end up on your assets on the Balance Sheet – unless the upper limit on asset write off is still available (certain years such as COVID and after). Updated - – unless the upper limit on asset write off is still available (check what applies with ATO or tax agent). 5 Owner / Director Results Determine the results for you the owner or partner (or Director if you have a company). What is the benefit to you? A director’s bonus (which can reduce profit and company tax). Are you getting the return you want from your own business? Who can you seek for a review and advice – your accountant, business advisor, successful business associate/friend? 6 Review Business Plan Review the parts of your plan that need more attention – there are 5 Core Functions every Business must perform – Leadership, Employee/Team, Finances, Operations, Marketing & Sales – what area is weak? – no-one has it all working perfectly (even big business!) – and one area may get neglected while you focus on improving another – the key is starting to delegate regular processes to part-time virtual or in-house assistants, so you can ramp up Marketing & Sales to propel the business – otherwise who will? It’s not just about a good advert – it’s the whole plan and strategy – keep improving and find what works and sells! 7 Bad Debt Review Check your bad debtors (accounts receivable). Write-off all those you think are unlikely to pay such as over 6-12 months, unless they pay when they can – this will enable a tax deduction this year. Record this in the notes/minutes of the business after ensuring that all reasonable steps have been taken to recover the debt. 8 Prepay Expenses Consider if prepaying certain expenses such as rent, repairs and office supplies before year end can reduce your current year tax liability. If payments are due early next financial year, a pre-payment may entitle you to the tax benefit much earlier. The rules differ depending on the type of entity so please call your tax agent, if you would like more clarification. 9 Stocktake Review your trading stock before 30 June, both by a physical count and your perpetual stock record system – do they match? Get it in line with and adjustment if required. Small Business Entities can be exempt from conducting a yearly stock take if the value of stock has moved by less than $5,000 during the year. Tax is paid on the value of stock at the end of the financial year so consider selling or disposing of slow moving stock so that it is not included in the count. *End of year business planning* is an on-going task when running a business – you need to keep reviewing the plan, and preparing for year-end early is the way to have a great finish! So to work on – do 1-2 a week to be ready by 30 June – action gets results! *Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!* *Or ask a question* *- Email* *This email address is being protected from spambots. You need JavaScript enabled to view it.* *or call 0407 361 596 Australia* ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Business Tax Tip – Prepare Business Accounts EOFY – Tips 10-18 Australia 2024 Details Published on Thursday, 23 May 2024 15:48 Last week we gave tips #1-9, and now this week we have #10-18 to prepare business accounts for end of financial year to have a finished set of books / accounts that you can use and analyse your business financially - act before 30 June! 10. Offset capital gains with capital losses If your business will make a tax loss in a current year, you can generally carry forward that loss and claim a deduction for your business in a future year. Alternatively, you may be able to offset current year losses if you're a sole trader or an individual partner in a partnership and meet certain conditions. 11. Consider the ideal timing for selling asset Are you planning on selling a profitable business asset this financial year, but are likely to earn a lower business income in the next year, then it may be worth postponing the sale until after 30 June, as the sale of assets is the net of sale, less the original cost. Alternatively, if you’re expecting an income gain from 1 July, it may be worth bringing the sale forward. Another factor depends on your expectations for future asset prices, hence don’t postpone a sale for tax purposes if you are expecting your investment to fall in value! 12. Franking credits If you are making profit and will pay dividends out to shareholders before the end of the year, have a review of the company’s franking account to ensure that the company has paid sufficient tax to enable the dividends to be fully franked. This may mean paying ahead of scheduled payments in an arrangement with the ATO, so consult your tax agent. 13. Spouse and Family wages For paying family members – it must be for reasonable and legitimate for work performed, and these related parties must be using STP by July 2021, but be aware of maximum wages for children, or else higher tax will apply. 14.Depreciation - Accelerated Write off The accelerated depreciation write-off for assets acquired by small businesses was: Up to $150,000 12 March to 30 June 2022, extended in May 2022 budget – (special COVID-19 stimulus measures, small business pool)! And for certain entities, Up to full expensing to June 2023, under some conditions. The write-off threshold was previously $1,000 and the concession only applied to businesses with an aggregate annual turnover of less than $2 million, up until 2016. After that, the Government will extend access by increasing the annual turnover eligibility threshold from $2m to $10m from July 1, 2016. SEE more at ATO. 15. Use super to manage Capital Gains Tax Have you made a capital gain on the sale of an asset this financial year? And, if you also earn LESS than 10% of your income from eligible employer employment, (that is mostly self-employed) you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain. You will need eligibility to contribute to superannuation (which means you are under the age of 65, or under 75 plus meeting the work test (after 2017 abolished), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement decision and age). SEE more at ATO. 16.Make tax deductible super contributions There maybe a tax deduction for personal super contributions that you made to your super fund from your after-tax income – for example, from your bank account directly to your super fund. If you have other non-employer income (eg high interest, investment or sole-trader income) you can claim a deduction for your super contributions, and need to give your super fund a Notice of intent to claim or vary a deduction for personal contributions (NAT 71121) and receive an acknowledgment from your fund. There are other eligibility criteria you must meet. SEE more at ATO. Note the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate (which could be up to 45% plus Medicare levy) or the 15% when it enters super. 17. Review your investment portfolio Check investment portfolios (personal and business) and if you need to re-allocate investments. Consider portfolio allocations – are you over or underweight in certain industry sectors or stocks, carry stocks that have exceeded your price targets or ones that under-perform – take the opportunity to re-balance. 18. Best Tip of all Seek professional advice unique to YOUR business and personal case to review all issues – both go together! If you need a referral, call me – 0407 361 596 – plan NOW don’t delay! "What is your tip? Consider posting a review or comment for us below!" *Need help? Not sure?* *Call for FREE 30min advice / strategy session today! 0407 361 596* ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ More Articles... Business Tax Tip – Preparing tips 1-9 your Accounts for EOFY Aust 2024 Bookkeeping – Insolvency & Liquidation meaning and solutions - Australia Business Tax Tip – Casual Overtime and the Minimum Requirements for businesses Business Financials – 3 levels of Profit Margins Cash Flow tip – Day-to-day Accounting activities – daily weekly monthly Bookkeeping – How to enter a Chattel Mortgage in your accounts books Business Tip – Success advice of 2 millionaires Business Financials – What is equity meaning in a business & accounting? 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