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 with hair, it’s the kind of work that can make you want to pull it all out.
You’ll notice that we said 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!
- 1. Key financial dates
- 2. EOFY checklist
- 3. Getting the paperwork ready
- 4. Review Your finances
- 5. Tax deduction strategies
- 6. Take the stress out of EOFY
- 7. Start the new financial year on the right foot
- 8. Breeze through the next EOFY
1. Key financial dates you need to remember
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 your business makes payments to other contractors or subcontractors, you need to lodge a taxable payments annual report by 28 August.
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.
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, and meet your deadlines.
2. EOFY checklist for self-employed tradies
1. Talk to your accountant (if you have one)
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.
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.
2. Round up outstanding invoices
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:
Graphic provided by Crazy Egg.
3. Log all business expenses
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. Here’s more information on what you can and can’t claim as a business expense.
4. Organise your paperwork
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).
5. Do a stocktake
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.
6. Finalise payroll
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.
3. Getting the right paperwork ready
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.
What needs to be filed with the Australian Taxation Office?
Here’s what you’ll need to file with the Australian Taxation Office:
- Income tax return. This form details all your personal income for the last financial year, how much tax you’ve already paid on that income (if any) and the business expenses you’ve claimed. Your profit will be used to calculate how much tax you must pay for the last accounting period – or whether you’re owed a refund.
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.
4. Review your finances
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.
5. Tax deduction strategies to implement this year
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.
Invoice for as much work as you can
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.
Declare bad debts
Using an accrual accounting method, review any bad debts. You can only deduct bad debts if you declare them at the time.
Tools can be assets, rather than expenses
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.
6. How to take the stress out of EOFY
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:
- Quick quotes and easy invoices - Sending quotes and invoices from your home office computer is fine – but it can be limiting. Having the capability to quote, invoice and chase payments while you’re on-site or in your van can help reduce the hours you spend stuck at your desk. Features like automated payment reminders will help keep unpaid invoices to a minimum. When it’s time to reconcile your accounts, they’ll always be 100% accurate.
- Speed up data processing - When you manually transfer data from your job book or timesheets into Word or Excel, you’re duplicating your work. Using a system that automatically triggers these actions – without you lifting a finger – will improve the accuracy of your data and eliminate the unnecessary double-handling.
- Integrate accounting and job management - Working with systems that can be integrated like Tradify and Xero will allow you to streamline processes right across your business. This means throughout the year you can reduce the time you spend on your admin, get real-time visibility of your cash flow and have greater control over your business. Tradify also works with Quickbooks and MYOB.
7. Start the new financial year on the right foot
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.
8. Get organised and breeze through the next EOFY
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 an 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 returns. For more detailed information, check out the ATO.