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Business tips for the end of the financial year

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Is your business on track for the end of the financial year? Here are some tips to ensure your business is prepared.

As the end of the financial year and the tax office looms on 30 June, I thought it would be wise to ask respected chartered accountant and founder of Australianbiz.com.au, Joe Kaleb to give us his last minute checklist for anyone in business.

Tax planning strategies

  • Top up super contributions. Note that employer super guarantee contributions are included in the $25,000 and $50,000 thresholds.
  • Delay invoicing customers or receipt of income until 1 July.
  • A small business with a turnover under $2 million can claim an immediate deduction for the cost of depreciable assets costing less than $1000 and certain prepayments (for example, lease and rent expenses).
  • Dispose of slow-moving stock and write-off obsolete stock before 30 June.
  • Write off bad debts and claim back the GST credits where the debt has been outstanding for more than 12 months.  
  • Review PAYG instalment obligations and consider varying the instalment for the June 2010 quarter where the estimate of business income tax payable for the year is less than the instalments raised by the ATO.

Bookkeeping procedures

  • Ensure that BAS lodgements and super guarantee contributions are up-to-date.
  • Where the business is behind on its tax and BAS payments ensure that payment arrangements have been entered into with the ATO.
  • Remind employers about the new requirement for reporting salary sacrifice contributions on employee PAYG Payment Summaries.
  • Back up all data and ensuring compliance with record-keeping requirements. The ATO requires businesses to keep records for at least five years.
  • Prepare to close off the 2009/10 and review the major balance sheet and profit and loss items to confirm:
  • Bank accounts and loans are reconciled.
  • Debtors’ and creditors’ subsidiary ledgers are reconciled to the general ledger.
  • Stock on hand agrees to the stock records.
  • GST accounts and PAYG withholding are reconciled to the business activity statements.
  • Wages in the profit & loss is reconciled to the PAYG Payment Summaries.
  • Capital items such as plant & equipment purchases have not been expensed as repairs.
  • Amounts in suspense have been allocated to the appropriate account.  
  • Private expenses are not included in the profit & loss unless fringe benefits tax has been paid.  
  • Material differences between income and expenses this year compared to the prior year can be explained.  

Having the bookkeeping and paperwork up-to-date and accurate before seeing your accountant not only makes life easier but saves time and money.

Planning for the 2010/11 year

These steps should be undertaken to improve on the performance of the previous year:

  • Update the budgets for the next 12 months and compare actual to budget.
  • Arrange credit facilities with the bank where cash shortages are forecast.
  • Review the accounting software package and consider updating to the current version or changing software suppliers.
  • Review credit terms with suppliers and customers and make changes if required.
  • Review insurances to ensure adequate level of cover.
  • Reduce costs on areas identified as excessive in the current year.
  • Implement new internal control systems to address weaknesses identified. 

You have to agree that this is the ultimate tax year checklist but now it is up to you to check it all off. Good luck. 

So, if you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Friday, June 18, 2010

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