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What to prepare for the end of the financial year?

John Tran
April 19, 2023
What to prepare for the end of the financial year

As the end of the financial year (EOFY) fast approaches, small businesses should make sure they’re prepared to wrap up their bookkeeping and file their tax returns since income tax is calculated from 1 July to 30 June.

It can be stressful, but a bit of preparation now can take out of your stress. So in this article, we will talk about how to prepare for the EOFY and make sure this financial year closes on a positive note!

What is the end of financial year?

The financial year is an important time for all businesses, especially small business owners since at the end of each fiscal year, they must wrap up their books and put together crucial paperwork as well as finalise accounting records in order to submit their tax returns to the Australian Taxation Office (ATO).

When filing your tax return, the ATO uses the information you provide in order to determine how much tax you owe. That's why it is essential that all your financial records and paperwork are correct and accurate once you submitted them. So whether it’s a business expense, profit or loss, or any other type of income - it’s important to keep track of all financial information throughout the year as this will not only make filing your return easier, but it will also help ensure that you’re paying the correct amount of tax. (source: reckon)

How to prepare for the end of financial year?

1. Update and review your accounts

It is important to assess the financial performance of your business with a view toward reducing costs, increasing revenues and improving profitability. So take the time to go through your books and spot any discrepancies or trends that may require further investigation because this can help you identify areas where you might be able to reduce unnecessary spending and maximise efficiency. Additionally, it's a good idea to review any outstanding invoices and ensure you are collecting payment in a timely manner. This is also the ideal time to complete any necessary forms or applications that may be required of business owners at the end of the financial year.

2. Assess your assets

Your assets may consist of things like real estate, vehicles, and machinery. Ensure that each of these is accurately recorded and accounted for since you may be able to claim a tax deduction for any assets that experienced significant depreciation throughout the fiscal year. Moreover, keep in mind that if you have recently acquired new assets make sure they are also correctly listed in your books.

3. Prepare your tax returns

If you don't have a firm understanding of the tax code, it can be a challenging and complicated procedure. That's why it may be helpful to connect with an accountant or other tax expert who can provide clear guidance and support as you get ready to file your returns since they will assist in making sure that every relevant information is included, your returns are prepared accurately, and you are utilising any credits or deductions that may be available to you given your circumstances. 

4. Review your budget and forecasting

At the end of the financial year, reviewing your budget and assessing whether or not you are on track with your goals for the upcoming year is important. If necessary, make any adjustments that need to be made in order to stay within a comfortable margin of profitability and take this time to review your forecasting to make sure that it's up-to-date and accurate.

Taking the time to go through each stage will guarantee that you are well-prepared when it's time to file your taxes and that you will obtain any deductions or credits that are available to you as these procedures can help you prepare for the end of the financial year as easily as possible.

Last Words

At the end of financial year, there are various activities that Aussies need to do and these include filing their tax returns, preparing for upcoming budgeting tasks and ensuring all records for business transactions are kept up to date. Therefore, it's crucial to approach the season with a clear plan and knowledge of any legislative changes that could have an impact on taxes or other financial commitments. Because by preparing for the EOFY, Aussies can ensure their finances are in order and make the most of the new financial year ahead!

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