Be Prepared – 10 Tips for a Less Taxing Tax Time
“How time flies…” Don’t we all know it! There are certain dates on the calendar that never change, but how many of us continue to battle shopping centre crowds in late December or search desperately for misplaced receipts in late June?
It might be “only March”, but that gives us only a couple of months before the dreaded EOFY. Here are a few simple hints for a more relaxed, tax-effective 2020/21.
- Make a checklist
Who doesn’t love a good checklist? The end of the financial year can be a busy, stressful time and stress increases forgetfulness. Having a comprehensive list of the tasks you’ll need to complete and the documents you’ll require will reduce your chances of missing a vital step or scrounging for documents last minute.
- Prepare your documents
While you won’t be able to generate some reports until closer to the date, there’s plenty of documentation you can start putting together ahead of time. Either print and store in a file if you’re old-school, or compile your documents in an electronic folder ready to send straight to your accountant when the time comes.
- Organise your receipts
Gone are the days of keeping your receipts in a shoebox. Or at least they should be! Make sure you’re using a well organised filing system for your receipts throughout the year to avoid the late-June rummage. Electronic storage is a great option, and cloud-based storage will provide you with important backup.
- Stay on top of your bookkeeping
As with your receipts, precise and thorough bookkeeping throughout the year will make tax-time far less challenging. Reconcile your bank account and credit cards against expenses to ensure there are no errors preventing your books from balancing.
- Reconcile your accounts
Accounts receivable and payable should be reconciled. This will give you time to chase any late payments, along with making yourself aware of any tax-deductible expenses that can be paid off this side of July 1st.
- Do your research
Put in some study hours to avoid missing out on any potential deductions. A visit to the ATO Small Business Newsroom will keep you up to date with the latest changes to tax law and provide you with a good knowledge of which small business tax concessions can benefit you. The Australian Taxation Office deductions page will arm you with the information required to maximise your permissible tax deductions.
- Pay off debt and plan capital purchases
Pay off as many tax-deductible expenses as possible before June 30th to claim the tax deduction this financial year. Consider making capital purchases that can be written off via the instant asset write-off scheme. Talk to your financial adviser to discuss whether it’s more beneficial for you to write off the asset instantly or depreciate over time.
- Keep superannuation payments up to date
Ensure you are up to date with your employee’s superannuation. Late payments are not tax-deductible and missed payments may attract the non-tax-deductible Super Guarantee Charge.
- Plan your stocktake
Stocktakes are seldom fun, but a thorough stocktake is as important as reconciling your bank accounts. If you find you have considerably less or more inventory than your records show, you need to know why. Hand-held scanning systems can simplify the process, and putting some pre-thought and planning into your stocktake will greatly improve the overall experience.
- Recruit temporary employees
While not for everyone, some businesses may find extra assistance with stocktake, administration, or accounting to be very beneficial during this busy time of year.
So while it’s only March, hopefully, you’re now motivated to begin your end-of-financial year preparations now and greatly reduce your (and your accountant’s) stress levels in June. Unfortunately you’re on your own when it comes to the last minute Christmas shopping!