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June 15, 2022

Vodien Insider 4 min read

7 Tips to Prepare for the End of Financial Year

With the 30th of June being less than a month away, the end of the financial year (EOFY) is fast approaching. Most small businesses share a common goal in this crucial period: to have a hassle-free and successful EOFY.  

Tax periods are stressful and cumbersome for most new and emerging businesses, with many small business owners having to devote weeks of overtime to organise their accounts and fulfil tax obligations. 

But this anxiousness and last-minute worry are avoidable. If you own an SME, the following seven tips will tell you how to prepare for the end of the financial year and get through the tax period without any errors, mishaps, or unnecessary stress: 

Update and Prepare Your Records

The first and most important step in the tax period for SME owners is to bring their records up to date. 

You must ensure that all the receipts and outgoing transactions in the past year are accounted for since this period is also the most ideal time to follow up on outstanding payments owed to your company. 

Records of previous tax returns, employee contributions, and activity statements must also be prepared to assist in a streamlined and faster tax process.

Make the Most of Advanced Accounting Tools 

If you have maintained flawless account statements that detail your income and expenses in the previous financial year, your work during the tax period becomes much easier. 

However, using traditional accounting methods such as paper-based systems or outdated applications is bound to affect your record-keeping and is prone to errors and discrepancies.  

The best option is to opt for handy accounting tools that are available online. These tools will not only help you maintain accurate accounts but also ease the process of maintaining receipt records and preparing for the tax period.

Hire an Expert 

While SME owners may be tempted to handle the entire tax process on their own, there are many benefits of hiring an accountant or a bookkeeper that are advantageous on your part as a business owner. 

Outsourcing the process of tax compliance to an expert will not only save you a lot of time but will also ensure that the process is free of errors that might attract costly fines and penalties in the future.

Be Smart with Deductions 

Want to know how to save on business taxes while fulfilling all your tax obligations? Deductions are the answer. 

Deductions allow for the reduction in the portion of your income liable to be taxed. As a small business owner, you must make the most of the existing tax regime to ensure that no deduction that you are eligible for is left unclaimed. 

For example, the federal government has a popular instant asset write-off scheme for small businesses that you may claim if you fulfill the requirements under the regime.  

Also, remember to write off all bad debts that you may have already paid taxes for. This will allow you to claim a refund for those taxes under your annual tax returns. 

To make the most of these benefits, hiring an accountant or a bookkeeper is advisable since they are experts in analysing accounts and identifying deductions, if any.  

Keep Track of Regulation Changes 

Tax regulations in Australia have seen a string of changes and modifications in the past two years, primarily due to the COVID-19 pandemic and its impact on the economy. 

There are various government initiatives that are targeted at easing taxpayer burden, and such initiatives are likely to impact your tax returns as well.  

It is therefore critical to stay on top of these changes and understand how you can claim benefits under the new regulations. 

If you have any questions related to COVID-19 business relief measures, seeking professional assistance from accounting experts may be your best bet. 

Fulfill Superannuation Obligations Before June 30th 

Businesses that have superannuation obligations must pay employee super contributions of 10%. These payments are eligible for a 100% tax deduction. 

If you can fulfil your super contributions before the 30th of June, you will be able to claim deductions in your tax returns for this financial year instead of having to wait for the following year.

Mark the Calendar

The Australian Taxation Office levies penalties and fines on delayed tax filings, and for SMEs, these may prove to be disastrous. 

Set frequent reminders throughout the month of June to keep yourself on your toes and complete the tax process before the 30 June deadline to avoid fines.  

Also, remember that some steps in the tax filing process may need to be completed on dates before the said deadline. In such cases, it is important to mark those dates as well.  

Make the Most of EOFY 

The tax period can be quite stressful for SMEs, but we hope these tips can help you through the process and guide you to a successful EOFY. 

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