EOFY tax checklist for small business

small business
This EOFY – make sure your small business is prepared.

Tax-time need not be words that induce heart palpitations and a cold sweat. The easiest way to reduce end of financial year (EOFY) stress is to start with a plan and break everything down into smaller manageable tasks.

small business entity is a sole trader, partnership, company or trust that has a turnover of less than $10 million and operates for all or part of the income year. By law businesses are required to complete certain tasks at the end of the financial year. Each year you need to make sure you’re up to date with any changes, including changes in tax breaks, deductions, employee award conditions, etc.

As the end of the 2016 – 2017 tax year approaches, it’s time to complete tax returns, bookkeeping and take stock of finances. Putting some extra work into organisation will set you up for the year ahead. Review the previous year, and additionally, put into place strategies, look for ways to save money and start planning for future growth.

Here is a checklist to start you off on your way to EOFY efficiency.

EOFY checklist for small business:

  • Conduct a stocktake to ensure you have accurate information on your stock levels
  • Complete an income tax return. For more information on the tax differences between operating as a sole trader and a company; take a look at this fact sheet
  • Ensure your Business Activity Statement (BAS) is completed
  • Superannuation contributions up to date (these may be tax deductible)
  • Provide employees with their PAYG
  • Reconcile your payroll
  • Review staff salaries and award conditions
  • Reconcile your accounts receivable and payable by summarising your record of debtors and creditors (some unrecoverable debts can be written off as bad debts and therefore tax deductible)
  • Store your records. The ATO requires businesses to keep written records of claimed deductions for up to five years

What tax deductions and benefits can you claim?

Each year you will need to review if you are eligible for small business concessions. Here are some of the tax deductions you may be eligible for as a small business entity:

  • Vehicle and travel expenses; or if you work from home as a sole trader you can claim tax deductions on the cost of owning and maintaining your home
  • You can claim a tax deduction for the depreciating value of your assets
  • You may claim a business deduction on eligible assets that cost less than $20,000
  • The turnover threshold for fringe benefits tax concessions increased to $10 million in April 2017. This $10 million threshold applies for most concessions except the small business income tax offset (which has a $5 million turnover threshold) and the capital gains tax concessions (which has a $2 million turnover threshold)

Review and update your business plans, structure and outcomes

  • Review your finances. Did you meet last year’s performance targets? Where could you be saving money?
  • Set new performance targets to keep track of your goals and assess whether your strategies are working
  • Consider you marketing plans. Are your strategies working? Do you have long and/ or short term policies in place?
  • Has your business grown? You may need to review your business structure and the tax regulations
  • Develop profit and loss forecasts
  • Take a look at your insurance cover and review – especially if you’ve recently increased your number of employees

Be aware of tax refund scams. If you are contacted by someone claiming you owe money or are due a refund, verify their identity by calling the relevant organisation directly.

Finally, make sure that you have the reliable advice of a professional.