For business owners in Australia, the month of June signals the end of another financial year. If you’ve been in the business for a while, you’ll know the drill. But whether it’s your first time or your fiftieth, running through our EOFY checklist will help to make sure you’ve got everything sorted.
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For some trade business owners, EOFY can be a stressful and overwhelming time. Late nights are often spent sorting through a year’s worth of receipts, reconciling accounts, and navigating all the paperwork that comes with EOFY. For those of us who still have hair, it’s the kind of work that makes you want to pull it out early.
But only some trade business owners get stressed. That’s because there is a way to get through EOFY without losing sleep — or your mind. It just involves some planning and ticking off tasks that will ensure you don’t miss those all-important deadlines. The pay-off will be worth it when the next EOFY comes around.
We’ve created a checklist to help you tackle your year-end accounting and start the new financial year off on the right foot.
Short on time? Skip ahead!
The Australian financial year ends on 30 June each year. This is the time to start organising your books, finish any stocktaking, and finalise your accounts. To qualify for a tax deduction, your super guarantee contributions must be paid by this date too.
If you are a self-employed contractor, you can lodge your individual tax return on the first day of the new financial year. You have until 31 October to do this.
If you have employees, this is the due date for supplying them with any PAYG withholding payment summaries.
If your business makes payments to other contractors or subcontractors, you need to lodge a taxable payments annual report by 28 August.
Tax returns due!
If you use an agent to file your tax return, your individual tax return is due 15 May. Company income tax returns are due for lodgement and payment.
28 July - Q4 BAS statement and super payments due
28 October - Q1 BAS statement and super payments due
28 February - Q2 BAS statement and super payments due
28 April - Q3 BAS statement and super payments due
What happens if you miss a deadline?
The harsh reality is, missing a deadline will cost you – and penalty fees can add up. If you miss a couple, it’s easy to accumulate a huge, unforeseen and costly expense. Don’t let that happen – get organised with Tradify and meet your deadlines.
If you haven’t spoken with your accountant already, you’ll want to get in touch ASAP. They’ll be able to give you advice specific to your situation about what you need to do and by when.
Find out when tradies should hire an accountant.
If you’ve neglected your bookkeeping a little through the year, they can help you get your records in order. What makes accountants invaluable is the advice they can offer. Your accountant can make sure you’re taking advantage of any tax relief packages or tax deduction strategies that could potentially reduce your end-of-year tax bill.
Have you got unpaid invoices that slipped through the cracks? Now is the time to send out reminders and follow them up. Collect as much of the outstanding cash as you can. That way, when it’s time to reconcile your accounts they’ll be accurate.
Make sure you’ve charged all your customers correctly, follow up on overdue invoice payments and sort out any unpaid bills. You’ll also need to gather your bank statements, vehicle logs and receipts for any business expenses – including things you’ve paid out of your personal account. Once you’ve done all that, you’ll be able to reconcile any outstanding transactions.
A cloud-based accounting system makes this easy. Tradify can help by connecting and sharing job information with the most popular options out there:
When you pay for something necessary for the everyday running of your business, it’s a business expense that you can claim. Every business expense claim reduces your tax bill and leaves more cash in your business. To ensure you maximise these tax benefits, get your business expenses in order.
What you can and can’t claim as a business expense.
When putting together your business statements, you need to make sure you have all the paperwork to prove your incomings and outgoings. This means copies of bank and loan statements, invoices from suppliers, any credit card or hire purchase statements, records of payments to other contractors or employees and receipts for any expenses (including any asset purchases or maintenance costs).
For those tradespeople that keep stock, you’ll need to do a stocktake. Use this opportunity to adjust stock quantities where needed and generate an up-to-date inventory list.
Got staff? Review salary and wage information make any legislative updates to employee pay rates and determine your superannuation requirements.
You also need to give your employees a payment summary indicating how much they were paid this financial year.
The tax year is from 1 July to 30 June. After the end of the tax year, the ATO works out how much tax you need to pay based on your income for the year.
Here’s what you’ll need to file with the Australian Taxation Office:
You can lodge online using myTax, through a registered tax agent or complete a paper tax return. Your tax return covers the income year from 1 July to 30 June. If you need to complete a tax return you must lodge it or engage with a tax agent by 31 October.
Don’t forget your GST return
You’ll also need to declare how much GST your business has paid throughout the year. You can do this as an annual return, or pay quarterly and submit an annual report.
Once you’ve run those reports and reconciled your accounts, you have what you need to reflect on how your business is performing – and make amendments as necessary. EOFY is a great opportunity to think about what’s going well and what could be improved.
EOFY is a great time to set some goals for the next financial year and figure out how you might be able to cut expenses or grow the business. Think about whether you might want to hire an apprentice, invest in new equipment or tools, or upgrade your admin processes with a job management system that saves you time and helps you run your business more efficiently.
There are a few things you can do during the year that may reduce your tax bill. It’s about getting smart with your accounting and staying organised.
Check out our article on 'Tradie Tax Deductions and Business Expense Claims in Australia'.
Review potential pre-payments like insurance, rent, accounting and bookkeeping fees. If you’re only pre-paying for a year in advance, then you can claim these expenses in the current financial year.
Using a cash accounting method, get as many invoices paid as you can before EOFY. That’ll increase your income, without paying tax on it if it’s not paid in cash.
Using an accrual accounting method, review any bad debts. You can only deduct bad debts if you declare them at the time.
Account for assets correctly by capitalising and depreciating them on your balance sheet, rather than listing them as an expense. This can be a smart move if you’re considering applying for finance to grow your business.
Many tradies have run successful trade businesses using pen and paper – and it can work for some people. But times are changing, and there’s a much better, more efficient way of doing things now. You could spend hours manually entering job info, only to realise you’ve misplaced timesheets or your materials list. If you could save those hours, why wouldn’t you?
Turn to technology
Streamlining your workflow processes using cloud-based tools can help you reduce the time you spend on your weekly admin tasks – and end-of-financial-year preparation too. Here’s how:
If you change accounting systems halfway through a financial year, you and your accountant will need to go back and redo work that you’ve already done. It’s better to finish everything off for EOFY, and then move forward for a whole year with a clean system. It also saves your staff having to run multiple systems at the same time – which is inefficient and can lead to human error.
EOFY is the perfect time to look at ways to improve the efficiency of your trade business. If you’re sitting on the fence about trying job management software or switching accounting systems, now’s the time. Making the switch at the beginning of a new financial year is often easier for everyone involved.
It happens every year, yet EOFY continues to cause a lot of stress for business owners. Whether your business is brand-new or you’ve been in it for decades — it’s a fact of self-employed life and a deadline that you don’t want to miss.
But just because it’s something you have to do, it doesn’t mean you need to lose sleep over it. Getting organised and using the power of technology can save you a tonne of stress and money and ultimately improve the financial health of your business.
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Please note: this article is a brief overview of what’s required for your year-end accounts and is not intended to be financial advice. We strongly recommend speaking to an accountant before filing your tax returns. For more detailed information, check out the ATO.