End Of Financial Year Checklist for Businesses
Closing off another financial year is just around the corner and whilst this process can cause many business owners a headache, getting your ducks in a row comes with many benefits. Not only can this process help identify some important tax savings, but it also helps with compliance and can even identify some End of Financial year marketing opportunities.
If you are a business owner that struggles with getting through the year-end process, we have put together this handy checklist to help.
Review your Bookkeeping and Record Keeping
Small business owners often don’t invest sufficiently in bookkeeping and records keeping but in the long run, not doing so will cost you more and creates unnecessary risk for your business. We recommend that our clients use Xero for their bookkeeping. At the end of the year, you should be spending time making sure that you are getting the most out of your software. Get transaction posting as automated as possible by reviewing your posting rules and setting up new ones. Make sure that your General Ledger Accounts are set up correctly and GST codes are correct. You may be missing out on GST credits each quarter.
As with bookkeeping, good records keeping practice should be ignored, with more and more businesses going paperless, we recommend that our clients investigate appropriate solutions for collecting and keeping records such as tax receipts or employment records.
Getting your numbers right is the first step when it comes to the end of the financial year. Ideally, you would reconcile the transaction in your business more often than annually, but before you send anything off to your Accountant or lodge with the ATO, you should review it for completeness and errors. Knowing your number will also help identify tax planning opportunities so you shouldn’t leave this to the last minute, so you have time to take advantage.
A quick guide on what should be reconciled:
• Bank Accounts
• Petty Cash
• Accounts receivable
• Accounts Payable
• Payroll – PAYGW, Annual Leave, Superannuation
• Personal expenses that have been paid by the business
Business Activity Statements
Make sure your BAS lodgements are accurate and up to date. As mentioned above, how you have set up your bookkeeping software may impact how accurate your Activity Statements have been. Your Accountant will reconcile your Activity Statements at year-end but depending on when you get your taxes done, you may be missing out on GST credits that are more beneficial in your business bank account when you are entitled to them rather than waiting 12 months to get them. If you haven’t kept up with lodgements, you should attend to your lodgements and arrange an ATO payment plan where necessary to help get you back up to speed in the next six months or so. Please note that the ATO is currently ramping up debt collection at present. You should reach out to your Accountant for assistance with late lodgements.
End of Year Payroll and Super
To be able to accurately report your 2022 Income Statements you will first need to reconcile your payroll. Ensure that things like salary sacrifice, superannuation, and fringe benefits have been reported correctly. When it comes to reporting payroll tax and super, employers must use Single Touch Payroll (STP) to automatically deliver this information to the ATO. You should check to see if this information has been reported correctly throughout the year.
Your super guarantee (SG) contributions also need to be accurate and up to date – your June SG is due 28th July 2022. If you have fallen behind on your super payments, it is important that you get in touch with your Accountant for assistance as the penalties can be quite harsh.
You will have up until 14 July to finalise your employees’ end of financial payroll information for all employees except closely held employees. Employees can then access their Income Statement via their MyGov account.
Depending on the size of your business you may carry a liability for accrued employment entitlements. You will need to ensure that these amounts have been calculated correctly and are up to date.
Taxable Payments Annual Report
Businesses and government entities who make payments to contractors may need to report these payments and lodge a Taxable payments annual report (TPAR).
Contractors can include subcontractors, consultants and independent contractors. They can operate as sole traders (individuals), companies, partnerships or trusts.
A TPAR must be lodged by 28 August each year and you can work out if you need to lodge a TPAR here
If your business carries stock, the stocktake of inventory should be completed by 30 June 2022, ensure that you have the resources to get the job done right. A good stocktake process can identify marketing opportunities with stock that may not be moving and help identify any spoilage.
Plant and Equipment
If your business has substantial plant and equipment and you maintain an asset register, review this register and record any adjustments. Based on this review you may adjust life expectancy and identify obsolete Equipment. This will help when your Accountant does your depreciation, and it will help you budget for replacements.
Spending time on your business at the end of each year is not just about reconciling the past, it is also a time to get your business ready for next year. The 1st of July is usually when important legislative changes come into effect that may impact your business and it is important to stay on top of them. If you have any questions about upcoming changes that may affect you and your business or you require assistance with the year-end process, reach out to one of our Accountants.