The end of the financial year is a critical time for small businesses to review financial records, organise expenses, and prepare for tax lodgement. Completing key bookkeeping tasks before 30 June ensures that your business is ready for tax time and maximises eligible deductions. Here’s your comprehensive end-of-year tax checklist to stay on track and avoid ATO penalties.
Why Is End-of-Year Tax Preparation Important?
Preparing for the end of the financial year allows you to:
- Identify tax deductions and credits
- Review outstanding invoices and payments
- Ensure accurate financial records for tax lodgement
- Avoid ATO penalties for late or incorrect lodgements
- Assess cash flow and financial health
End of Year Tax Checklist for Small Businesses
Follow these essential steps to get your business ready for tax time:
- 1. Reconcile Bank Accounts: Match bank statements to accounting records and resolve discrepancies. This ensures that all transactions are accurately recorded.
- 2. Review Accounts Receivable: Follow up on unpaid invoices, write off bad debts, and record any payments received after 30 June.
- 3. Update Accounts Payable: Verify that all bills and expenses are recorded, and ensure that payments made after 30 June are accounted for in the next financial year.
- 4. Inventory Stocktake: Conduct a physical stocktake to assess inventory levels, write off obsolete stock, and adjust records accordingly.
- 5. Review Asset Register: Record any asset purchases, disposals, or depreciation for the financial year. Ensure that asset records are accurate and up to date.
- 6. Calculate Employee Superannuation: Ensure that all superannuation contributions are paid by 30 June to claim a tax deduction for the financial year.
- 7. Reconcile Payroll Records: Verify employee wages, tax withholdings, and super contributions to ensure they align with payroll reports and ATO records.
- 8. Identify Tax Deductions: Review expenses to identify potential tax deductions, including business travel, vehicle expenses, and office supplies.
- 9. Lodge Final STP Report: Submit the final Single Touch Payroll (STP) report for the financial year to the ATO to finalise employee income statements.
- 10. Back Up Financial Records: Ensure that all financial records, including bank statements, invoices, and payroll reports, are securely backed up and accessible for ATO review.
Tax Deductible Expenses to Review
Before lodging your tax return, review business expenses to maximise deductions. Common deductible expenses include:
- Office supplies and stationery
- Business-related travel expenses
- Vehicle expenses for business use
- Employee wages and superannuation
- Depreciation of assets (e.g., computers, equipment)
- Business insurance premiums
- Software subscriptions and IT expenses
Tax Planning Strategies for Small Businesses
To minimise your tax liability, consider implementing these tax planning strategies before 30 June:
- Prepay Expenses: Pay for expenses like insurance or subscriptions in advance to claim deductions in the current financial year.
- Write Off Bad Debts: Identify and write off uncollectible debts to reduce taxable income.
- Contribute to Superannuation: Make additional super contributions for yourself and employees to reduce taxable income.
- Defer Income: If possible, delay invoicing until after 30 June to defer income to the next financial year.
Common End-of-Year Tax Mistakes to Avoid
To avoid ATO penalties and ensure a smooth tax lodgement process, watch out for these common mistakes:
- Failing to reconcile bank accounts and credit card statements
- Overlooking small expenses that are tax deductible
- Incorrectly categorising personal and business expenses
- Missing the deadline for paying superannuation contributions
- Neglecting to back up financial records and receipts
Need Help Preparing for Tax Time?
Managing tax obligations can be overwhelming, especially if your bookkeeping is not up to date. Northern Beaches Bookkeeping Solutions provides expert tax preparation and bookkeeping services to help you stay organised, maximise deductions, and lodge BAS and tax returns accurately. Contact us today to get started.