It's that time again when the end of financial year (EOFY) is lurking around the calendar corner. Small business owners across Australia are getting their paper records and finances sorted, but are also looking at how to continue their trajectory throughout the 22/23 financial year.
If your small business is looking to keep up with the pack, let us remind you of some of the key items you need to keep on top of and how invoice financing can help you hit the year running.
Keep reading to find out how you can make sure the financial year changeover and tax time runs smoothly for your business.
Record keeping & tasks
Give yourself a refresher on the financial and other records you need to have at the ready for tax time, as well as some of the other important tasks that small businesses are required to complete at the end of the financial year:
- Keep your income and expenses thorough and up to date through a profit and loss statement.
- A stocktake for your small business inventory is a great way to understand your assets to ensure they're reflected correctly on your tax return.
- To assist in calculating your depreciation expense claims and capital gains tax, collate a record of all of the business's asset purchases or any expenditure on improvements.
- Complete your Business Activity Statement (BAS).
- If you have Pay As You Go (PAYG) withholding, Fringe Benefits Tax (FBT), superannuation obligations or Goods and Services Tax (GST) obligations, then complete any yearly reports that apply. This includes finalising any statements associated with single touch payroll if it applies to you.
- Make digital copies of any paper records. In Australia, you're required to keep anything to do with tax, (down to travel expenses and proof you've completed yearly tasks) for five years. Digital copies make this a breeze, as they can't get lost or damaged in a filing cabinet and can often be linked with any business software that you use for accounting.
Book in with your tax agent
Your accountant will be experienced in preparing tax returns for all business structures. There are tax differences between a sole trader and any other business structure. Accessing professional help where it counts can also mean avoiding the rise in 'tax owed' scams that can put your financial situation at risk if you unknowingly pay a scammer.
Scams like this claim that you haven't paid enough tax and request your credit card or debit card details. Always exercise caution with any messages like this and run it past your accounting practitioner first.
Check for COVID-19 Support
One of the items that hasn't made the EOFY Checklist in the past is to look at any COVID-19 support that your business may be eligible to claim before the financial year draws to a close. The support packages have been changing over the last couple of years and are different across the states, so it's important to check closely if you're eligible for anything.
Know your business expenses
Sifting through your bank statements well in advance of June 30th can be a good idea, to make sure you don't miss anything or haven't recorded personal expenses against your business. This activity may allow you to identify any business deductions you've previously missed or prompt you to review certain expenses, for example, your business insurance.
This will not only help you claim deductions but will give you a better idea of your yearly business income and identify any cash flow blocks.
Good to remember: if you've bought an asset that cost less than $150,000 and you have an aggregated turnover of less than $500 million, you may be eligible for an immediate deduction!
Understand where a tax deduction applies
Understanding your tax deductions is crucial to getting the most out of your tax return. If you want professional advice on what's tax-deductible or not, it pays to get in touch with your tax agent in advance.
The ATO has made temporary full expensing available to eligible businesses until 30th June 2023. This means that rather than depreciating an asset over its useful life (and claiming a tax deduction for the depreciation), the tax deduction can be claimed in full during the year the asset was purchased.
Check your due dates
There are several key dates on the financial calendar that don't necessarily all fall due at the end of the financial year. Don't rely on your accountant alone; it does pay to know when a due date is approaching, especially during end of financial year preparation.
Simplify with software
Getting the most out of your accounting software could be the key to saving time, not only this financial year but next financial year as well. If your office equipment doesn't include any software that helps track your income, expenses and balance sheet, then you could be putting yourself at a disadvantage!
Those who require a Business Activity Statement, PAYG withholding or have loan accounts, find it much easier to prepare for an income tax return when they've got the right accounting software linked to their business bank accounts.
Access invoice financing
Speaking of having the right software to help you at tax time, did you know that one of the ways you can prepare to start the next financial year strongly is to connect a Waddle line of credit to your accounting software?
Waddle's invoice financing solution unlocks money that's sitting in your unpaid invoices. It is linked to your accounting software, which makes for seamless access to funds that you're otherwise waiting weeks or months to be paid!
If you've got outstanding invoices that total $10,000 or more that aren't looking like being paid before the end of the financial year, Waddle can help you access up to 85% of the outstanding invoice value. Not only will this allow you to make any large purchases this financial year to potentially improve your deductions, but you will then have a Waddle account established when the new financial year starts, which means that your 2022 cash flow can be running from July 1st.
To learn more about this innovative finance solution and how it could work for your small business, contact the Waddle team, today!