Get EOFYthing in order
And just like that, it's the end of the financial year here in Australia. Already? Wow. That means half of 2020 is already over (but, to be fair, there's already been a whole lot going on!).
For small business owners, particularly sole traders and professional service providers, tax time can be daunting. But it really shouldn't be.
Heading into a new financial year is a chance to learn from the previous year, plan for the year ahead, and try to find a moment to take a breath and get yourself in order.
When you are a sole trader or very small business owner, the list of things to do at this time of year can seem ridiculous. But, as I learned from following the awesome Emma at The Women's Accountant - Tax is not a dirty word. Say it with me now.
I know it feels weird, but if you work smarter now, you (and your accountant) won't have to work harder later!
Here are 10 great tips from www.business.gov.au that can help you break down what you need to do get yourself in order for EOFY!
Check what record keeping and other tasks are mandatory for your structure
Your first point of call for this should be your accountant. You should definitely have an accountant if you are in business. You can also check out the Australian Taxation Office website.
The basics will include a summary of your income and expenses for the year, a stocktake, completing and lodging tax returns, meeting superannuation requirements, and ensuring you have digital copies of any paper records (and they are backed up!).
Find out what tax deductions and concessions you can claim
You can claim deductions for most business expenses, as long as they directly relate to your business. You must have records to prove that the expenses you are claiming are business deductions. Again, you should absolutely talk to a tax professional.
Check your tax agent is registered
This is a big one. You can search the Tax Practitioner's Board, or search for the registered tax practitioner symbol on their website. You should never trust your tax affairs to someone who is not appropriately registered to provide that service.
Keep up to date with tax changes
This can be tricky. You are so busy running your business, it can be hard to stay up to date. That's why it's really important to have a good relationship with your accountant. Keep in touch to check that you don't need to be doing anything different throughout the year. Go over what you have done this year with them, and make sure that you haven't missed anything.
If you would like to keep up to date directly, you can subscriber to some of the ATO's small business publications, so you get the news directly.
Be wary of tax refund scams
These do the rounds every year, and they do seem to target small business. Common scams include claims you've overpaid your taxes and are eligible for a refund if you just pay them a fee for administration or transfer costs, or claiming you have underpaid your tax and need to repay it immediately by giving the caller or emailer your credit debit card details.
The ATO will NEVER ask for a credit card or bank account details directly. You should only make payments to the ATO using a verified direct deposit or BPay code. If you ever have any doubts about the validity of any request for payment, always contact your tax professional or the ATO directly to confirm.
Review your finances
This one can make a huge difference from year to year. By looking at whether you met your targets, you can get a better feel for your cashflow, and budget accordingly for the new year. Again, you should do full tax planning with your accountant or adviser - getting someone to talk through it with you will mean you can make sure you understand everything, and that it fits with what you want to do with your business.
Review your business and marketing plans
Like the point above, reviewing your business and marketing plan helps you to remember your goals, but also check if what you are doing is working for you. It's a chance to make sure you are working smarter already, and plan for any changes you can see ahead.
Review your business structure
If you have experienced growth, or had to change the way you operate over the last year, your current business structure may not be the best to handle that. Talking through this with a professional will ensure that you are making the best decisions for you, your business, and your future. Being aware of the pros and cons of changes means you can make an informed decision about your business, and be ahead of any problems that may arise with your current structure.
Check your insurances
If you have had growth during the year, or a change in how you operate, your level or type of insurance may need to change too. Speak with a broker or adviser to make sure you get the best deal that will cover you for what you need.
Back up and secure your files.
Make sure that you have a copy of your latest reports, documents, receipts and files, backed up and stored in a secure off-site location. Make sure you include your registrations and customer files as well. If the worst happens, you need to be prepared, so that you are still able to operate as and when you can. You have worked so hard to build your business - don't risk losing it all because of a power outage, or freak weather event.
These tips come from the Australian Small Business website. You can read the full article, and follow their links to some of the checklists, calculators and further information here.
Do you have EOFYthing ready?