So, it’s end of financial year.We’re on the final countdown to the big man in red’s appearance!
What does EOFY mean for you?
If you’re running a business and doing your own bookwork, then it’s time to pop your skates on and get rolling, because this time of year, there are ATO lodgment deadlines around every turn.
Enter your friendly bean-counter pal (me), to give you a helping hand.
Prewarning: If you have no interest in learning how to strategically make your way through end of financial year without tearing your hair out, then this blog is not for you.
Maybe head on over to one of my more light-hearted reads (I suggest a Day In The Life Of A Tradie’s Wife)
But if you’re thinking about the shit-ton of work you need to complete over the coming weeks, and have no idea how to tackle it all and come out alive, keep reading. 🙂
EOFY is a sprint for most small businesses, and a strategic approach to get those lodgements made on time will always trump chaos. The last thing you want is a detention note from the ATO, right?
Check out my 9 super simple steps:
- First item on the agenda: always reconcile the accounts. No excuses. Make sure the bank accounts, credit cards, loans, etc. all balance. I see businesses skip this step all the time, and you know what happens? Everything becomes a mess. Deductions don’t get claimed and income doesn’t get declared. The ATO doesn’t like that, and we need to make sure to always play by the ATO’s rules. Reconciling the accounts is the first step to making sure we are working with accurate data.
- Review the general ledger. What do I mean? I mean run a transaction report (you can do this in all accounting programs). Make sure all the transactions have been consistently added to the correct accounts. It’s difficult to get accurate insights into your reporting if you have allocated the transactions willy nilly.
- This step is a bit more technical, but it’s one of the most important steps in our practice. For every client’s accounts that we prepare, we reconcile the GST accounts. This means we make sure that the amount outstanding in the accounts as of 30 June equates to the GST liability accounts in our Balance Sheet. This step is super important, as it indicates whether there are any adjustments to be made to the June BAS for changes that may have happened to our bookkeeping throughout the year. It’s key to squeaky clean accounts, and that means a happy ATO. I know this might sound like techno-babble, so I’ve created some video training on this step (and all the steps, actually). Feel free to send an email to firstname.lastname@example.org and I’ll send the training to you.
- This step only applies if you pay staff. If this is you, congrats! You have yet another lodgment deadline, because no doubt your staff are waiting to lodge their tax returns. For this step, you need to run payroll summary reports and make sure the totals agree with your general ledger for both your expense accounts and liability accounts. You may find that running a trial balance in conjunction with the payroll reports will help you easily match up these balances.
- Again, this step only applies to business owners paying staff. Also, this step will vary depending on whether you are currently registered for Single Touch Payroll (STP). If you are not, then you need to prepare Payment Summaries (Group Certificates for us oldies). These days, with modern accounting systems, preparing Payment Summaries can be quite simple. (Sidenote: I would love to know how many people can remember the painful days of filling out triple carbon copy Group Certificates, and the rage that would come from spending 20 minutes completing one, only to make an effin mistake and have to start again… Or was this just me?) Back to my point, you need to run the payment summaries in your accounting system, and verify each one back to your payroll summary report before you hand any out to your staff. If, however, you’re lodging with STP, you have a whole other battle to endure. Well not really, but sort of. You still need to make sure all of your figures are correct, then you need to mark your figures as final in your accounting software. This will, in turn, create finalised year-end figures in your employees’ My Gov accounts. No payment summaries are to be created, or you will run the risk of the employee doubling up their income. Too easy, right? I think our main concern here will be fielding the employees who have no idea what a My Gov account is. If you need further information on this topic, I’ve created a whole blog called WTF is STP.
- Step 6 only applies to the industries that currently have to lodge Taxable Payment Schedules (TPARS): building and construction, cleaning, and couriers. Heads up road freight, IT, and security services – your industries are entering this legislation as of this year. The idea of the Taxable Payment Schedule is for the ATO to capture payments made to subcontractors. So, if you are one of these guys, you want to make sure your subcontractor’s details are correctly entered in your accounting system. You also want to make sure the TPAR report generated by the accounting system agrees with the subcontractor account on the trial balance you have previously run.
- If you are registered for GST and are therefore required to lodge a quarterly or annual BAS, you can now prepare all of the reports to review, prepare and lodge your BAS.
- Have you ever taken your bookwork to the accountant at the end of the year to process the Tax Return and had the accountant ask you about transactions that you had changed either throughout the current financial year or in past financial years? I can tell you first hand as a former accountant that this can be one of the hardest issues to deal with, not to mention the confusion it can cause you when you are trying to look back at previous work, not knowing where transactions came from! Sometimes transactions can sneak their way into old data – think about simple keying errors like putting the wrong date on a purchase. Not only would this simple mistake create issues with your reporting, but it could potentially affect your tax deductions, GST and a whole heap of other areas – all from one simple keying error! Do yourself a favour and lock the accounting period once you have reviewed all the bookwork and are happy with it. It’s a simple function in all accounting programs, and if you later find a problem that you need to address you can unlock the data, but at least you will be more conscious of any changes you are making.
- In my opinion, budgeting and forecasting are two of the most vital parts to running a successful, sustainable and scalable business. A business where you’re not just working day to day, flying blind, and feeling like your business has become a job. Forecasting and budgeting empower you to take control, set goals, monitor your progress, know what your expenses are, and more importantly, know where your income is coming from and when it will be hitting the bank. The start of a financial year is the perfect time to set your business up for success.
I know it’s not ‘fun’ or ‘interesting’, but I guarantee every point is necessary.
I understand that the EOFY sprint can be overwhelming, which is why I’ve put together a super simple roadmap for you to follow. Click the link below to have it emailed to you.
Then put the kettle on, grab the M&M’s, and settle in at your desk for a glorious day of number-crunching.
If none of this appeals to you, think about hiring a bean-counter to do the hard work, so you can take your cuppa and M&M’s to the couch and watch Netflix instead. 🙂