EOFY countdown for small businesses

The end of the financial year (EOFY) is still a couple of months away but now is a great time for small businesses to start thinking more about their tax obligations and financial reporting. With proper planning and a proactive approach, you can avoid last-minute stress and have a smooth start to the new financial year.

To help you start thinking about the EOFY, here are some important tips and strategies to help you stay on top of your tax responsibilities.

Starting your EOFY preparations early gives you time to organise your financial records, identify potential tax deductions, and correct any outstanding issues.

• Avoid last-minute stress: By starting early, you can spread out the workload over several months, reducing the risk of errors and the stress associated with last-minute preparations.
• Maximise your deductions: Early planning allows you to identify and take advantage of all the tax deductions that you’re eligible to claim.
• Better financial decision-making: As a business it’s important to have a clear understanding of your financial position. Knowing your position means you can make informed decisions about investments, expenses, and growth opportunities in the next financial year.
• Complying with your tax obligations: Understanding your obligations, getting it right and staying ahead of deadlines (for example, lodging and paying your business activity statements on time) will help you remain compliant, avoiding penalties and interest charges.

Organise your financial records

• Gather your documents: Collect all your relevant financial documents, including receipts and invoices for expenses, bank statements and payroll records. If you’re registered for fringe benefits tax, make sure you pay close attention to your records or declarations that demonstrate your fringe benefits tax (FBT calculations and support your position. Ensure all your records are well-organised, easily accessible and that you generally need to keep them for the next 5 years.
• Go digital: Consider using accounting software or tools to streamline the process of tracking income and expenses. These can help you stay organised and reduce the risk of errors as well as saving you time.
• Think about lodging your business activity statement (BAS) online: If you lodge your own BAS online, you:
     -   may get an extra two weeks to lodge and pay
     -   will receive reminders 21 days before your next BAS is due, and reminders to help you get it right and avoid mistakes before you lodge.

Review and reconcile accounts

• Bank reconciliation: Regularly reconcile your bank accounts to ensure all transactions are accurately recorded. This helps identify any discrepancies and ensures your financial records are up-to-date.
• Review outstanding invoices: If you calculate your business income on a cash basis, you should follow up on any outstanding invoices to ensure you receive payments before the EOFY.
• If you calculate your business income on an accruals basis, depending on your circumstances you may be able to claim a tax deduction for bad debts that you can’t recover from a customer or debtor.

Understand your deductions

• Time your expenses: If you have an upcoming expense that you want to claim a deduction for, consider whether you should pay it in the current financial year or if you should wait until the next financial year.
• Be conscious of depreciation rules: Capital expenses and assets often can’t be claimed as an immediate tax deduction, instead you can claim its decline in value over the time it is used. Ensure you are aware of thresholds and the rules that apply to specific assets such as motor vehicles. If you’re a small business you may be eligible to use the instant asset write-off rule to claim an immediate deduction for assets you purchased or installed this year.

Make your super guarantee contributions

• Make timely contributions: Ensure all super contributions are made on time, in full and to the correct super fund to claim a deduction for them. Contributions must be received by the super fund by the 28th day of the month following the end of each quarter.
• Review the SG rate: Remember, the SG rate increases to 12% on 1 July 2025. This means you need to calculate SG contributions at 12% for your eligible workers for payments of ordinary time earnings you make from this date. Your SG contributions for the quarter ending 30 June (which are due by 28 July 2025) are still calculated at the 11.5% rate for payments made prior to 1 July. A contractual due date may be earlier than 28 July for salary sacrifice contributions where you have agreed in writing with your employees to make those contributions by 30 June of each financial year.

Seek advice from a tax professional

• Speak with a tax professional: Engage a registered tax professional to review your financial records and provide advice on how to manage your tax. They can also help you identify potential deductions and ensure you’re complying with all your tax obligations.
• Stay informed: Keep up-to-date with any changes in tax laws and regulations that may impact your business. Again, a tax professional can provide valuable insights and updates.

Plan for the new financial year

• Set financial goals: Use this EOFY as an opportunity to reflect on your business performance and set financial goals for the upcoming year. This can help you stay focused and motivated.
• Budgeting and forecasting: Prepare a budget and financial forecast for the new financial year to guide your financial decisions and track progress. If you have GST, pay as you go withholding or super obligations, think about whether you can set money aside from your cash flow so you have the funds available when it’s time to pay.

By starting your preparations early and paying close attention to your obligations you can have a smooth start to the next financial year. Remember, early planning and organisation are key to avoiding tax time stress.

* Optus does not provide tax advice, this article has been prepared by the Australian Tax Office for guidance only.