End of Financial Year Tips for SMEs (EOFY)

‍1. Take advantage of asset write offs

With the Government continuing to offer tax write-offs for assets purchased before the end of the financial year, now is the right time to make any last minute important purchases. If you do, you’ll get a 100% tax deduction up to a value of $150,000. This means that if you need new equipment, a computer or chairs for the office, you have a few days left to buy and get an immediate deduction. Just be wary when making any purchases and only spend what you can afford. Remember, the short-to-medium term outlook is still unclear, so it may make sense for you to hold onto your cash for now.

2. Check your expenses

Tracking your business expenses is more important than most business owners think. Obviously, it’s not the most exciting of tasks, but it’s better to start looking at it straight away to avoid running around like a headless chicken when your tax return is due. For most businesses, the best way to do this, is to get out your folder of receipts and log into online banking. It’s then a simple case of cross-checking your expenses. For any items that you don’t have a receipt for, it’s best to contact that business directly to get one now. 

3. Calculate your profit and loss 

Fortunately, by keeping an accurate record of your expenses, as well as your income, you can quickly determine your profitability without digging through all your records.  To do this, tally up all your income and deduct the total of your expenses - that’s your profit. It’s always a good idea to compare your profit and loss with the corresponding figures from the year.  It’s worth having a good look at each income item to check it makes sense and nothing looks out of place. The profit you calculate may not be the final figure that you will pay tax on, but it will give you a good idea of what is likely to come.  

4. Pay your super contributions

Your superannuation contributions are tax deductible but in order to get a tax deduction it has to actually be paid and received by your superannuation fund by June 30. So we recommend you add this to your list of things to do in the last few days of the financial year.  Putting money into super doesn’t just assist with your tax profile, it’s the right thing to do to protect your future. Many business owners unfortunately don’t save for retirement and this can definitely affect their quality of life in later years.

5. Create a plan and calculate your cash flow for next year

The end of the financial year means the start of the next one and it’s a great time to sit back, take stock and identify what worked and what didn’t work.  Learning from this year's experience is a great way to start planning for the year ahead.  Use your revenue and expenses as a baseline for next, and create goals that help you become more profitable next year.  Put your goals in writing and create a budget to work from. Then you should calculate your cash flow and identify using this year's information, where potential pitfalls may occur. If your business is seasonal, this is especially important.

6. Contact your accountant

After doing all this, you should reach out to your accountant to get the ball rolling. Share any information you have collated, ask them for any help or suggestions and start working out a plan and timeline for submitting your tax return. It’s always best to start early than leave it to the last minute. Your accountant will appreciate it, and so will you!

Thriday is a smart business account that helps sole traders, small business owners, startups, freelancer and gig workers to manage their banking, accounting and tax. Thriday is the perfect solution for managing your end of financial year activities and submitting your tax return on time, with a minimum of fuss. You can sign up for Thriday below now.