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An EOFY tip sheet for small business

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As this financial year comes to a close, most small business owners will have their sights set on how to improve their performance over the next 12 months. Now is a busy time for businesses, so it pays to be extra careful with your bookkeeping, accounting and forward-planning activities. We've compiled a checklist to help your organisation get ready in the run up to the new financial year (FY).

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May 28 - FBT Deadline

The new FY starts on July 1, but there are a couple of dates before then that you'll need to keep in mind. The first is May 28, which is when Fringe Benefits Tax (FBT) obligations must be completed. You must pay this tax if you paid fringe benefits to employees exceeding $2,000 in value between the FBT year, which runs from April 1 to March 301.

Note: Businesses using a tax agent can lodge their 2017 FBT annual return electronically as late as June 25, although payments are still due on May 282.

Before June 30 - Tax planning

There are various tax planning strategies that you may wish to consider before the beginning of the new FY. These can include:

  Buy and implement assets
You may be able to bring forward tax deductions on assets that you purchase and implement before June 30. Small businesses that have turnovers of less than $10 million a year can also use the $20,000 instant asset write-off for the last time in for the 2016/2017 financial year. From July 1, the threshold will return to $1,0003.
  Pay Super Guarantee (SG) for the June quarter
SG for the June quarter is not due until July 28, but you can obtain a tax deduction for 2016-17 if you pay before June 30. You may also want to consider making any additional super contributions for yourself up to the age-based limits4.
  Write off bad debts
You can claim deductions for bad debt, which means many businesses choose to review their customers or clients for outstanding receivables. Anyone who is unlikely to pay can be identified and physically written off before June 30, although you should document efforts made to recover what is owed5.
  Estimate stock value
Small business owners that run inventory may need to perform a stocktake to value their trading stock, and you can write off any lost, damaged or obsolete items. You don't have to perform a stocktake if you can reasonably estimate the value of your inventory and the figure hasn't changed by more than $5,000 over the last year6.
  Set employee bonuses
You can bring forward any bonuses for employees if you have them documented and organised before June 30. These bonuses do not have to be paid ahead of the new financial year, but they must be written down and staff should be informed of what they will receive – the reasoning behind this, is that bonuses can have an impact on employee tax commitments7.

By June 30 - Payrolls, balance sheets and P&L statements

Now that you've planned ahead for EOFY, it's time to get down to the nitty-gritty details, which includes reconciling your payroll, balance sheets and profit and loss (P&L) statements. This can be a lot of work for a small business owner - consider seeking professional advice from a registered and certified accountant who can help you work through the complex nuances of your particular set of small business finances.

  Reconciling your payroll
  • Check all employee records are correct and complete;
  • Record all staff payments and pay any outstanding invoices from contractors and freelancers;
  • Provide PAYG Payment Summaries to your employees (the deadline is July 14, but you may want to do this alongside other EOFY duties);
  • Ensure you are prepared to lodge your PAYG Payment Summary Statement by August 14;
  • Store and back up any relevant information and documents8.
  Balance sheets and P&L statements
  • Reconcile bank accounts and loans;
  • Reconcile GST and PAYG withholding accounts to the June BAS;
  • Reconcile the general ledger with payables and receivables subsidiary ledgers;
  • Reconcile wages in P&L to PAYG Payment Summaries;
  • Ensure business expenses are appropriately assigned;
  • Update your P&L budget and identify potential savings;
  • Confirm GST codes for P&L and balance sheets are accurate;
  • Ensure suppliers have sent final invoices before June 309.
Also, consider checking that your BAS lodgements and SG contributions are up to date before EOFY.

General EOFY tips

These checklists can assist you in meeting your EOFY obligations for your business. Nevertheless, there are a couple of issues you may want to keep in mind for the weeks ahead.

  Tax scams

The Australian government's Department of Industry, Innovation and Science warns small business owners to be on the lookout for scams at this time of year10. Fraudsters may suggest that you are owed a tax refund and encourage you to pay an administration fee or transfer costs to release the money. Another common trick is to suggest you've underpaid on your tax and ask you to provide your credit or debit card details to settle the difference.

  Forward planning
EOFY involves a lot of looking back at the performance of the last year, but now can be a great time to plan for the next 12 months and beyond. Did you meet expectations in 2016-17? If not, you may want to revise your strategy and identify areas of improvement.
Note: You could also look at ways of growing your organisation, whether that's investing in the latest equipment and IT systems, expanding your office or opening a new site.

Growth opportunities may require a small business loan to get the ball rolling. If you are thinking about financing your business growth, contact one of our business banking specialists at IMB Bank to discuss the different options that may be available to you.

Enquire about IMB Bank business banking services


References:

1Australian Federal Government, Australian Taxation Office, 'Reportable Fringe Benefits', August 2016

2Australian Federal Government, Australian Taxation Office, 'Lodging FBT Returns', March 2017

3Australian Federal Government, Australian Taxation Office, 'Growing jobs and small business - expanding accelerated depreciation for small business', July 2015

4Australian Federal Government, Australian Taxation Office, 'When to pay super', June 2015

5Australian Federal Government, Australian Taxation Office, 'Adjustment notes' May 2017

6Australian Federal Government, Australian Taxation Office, 'Simplified trading stock rules' April 2017

7Australian Federal Government, Australian Taxation Office, 'PAYG withholding tax table - bonuses and similar payments' September 2012

8MYOB, The Pulse, 'The first time employers' guide to payroll', June 2015

9CPA Australia, 'Good practice checklist for small business' June 2015

10Australian Federal Government, Business, 'Essential Tasks at End of Financial Year (EOFY)', May 2016

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