Steps to Prepare for End of Financial Year

The end of the financial year (EOFY) is an important time for your business. You'll need to complete bookkeeping, tax returns and plan for the new financial year. This is a time when all businesses are required to finalise their books for a 12-month period and report all income and claim any deductions available to the business. This helps to determine how much tax the business must pay to the government or how much tax the government owes the business. To prepare for the End of Financial Year you should, review your financial record, reconcile accounts, prepare financial statements, evaluate your tax situation, set financial goals and plan for your next fiscal year, and speak to a financial advisor.

First, check what financial tasks you need to complete, e.g.

  • a summary of your income and expenses in a profit and loss statement.
  • summaries of your record of debtors and creditors
  • collating records of asset purchases or expenditure on improvements (to calculate depreciation expense claims and for capital gains)
  • completing and lodging your income tax returns
  • lodging yearly reports or returns for different tax types such as:

- Pay as you go (PAYG), including finalising income statements for Single Touch Pay role

- fringe benefits tax

- goods and service tax (GST)

  • meeting superannuation requirements
  • making digital copies of any paper records and backing them up.

Furthermore, find out which tax deductions and concession you can claim. You can claim deductions for most business expenses, as long as they directly relate to earning your income. For example, you may be able to claim deductions if your business: has set up a website, operates at home, has motor vehicle expenses, etc.

Prepare your financial statements, ensuring they are accurate and up-to-date. This process involves collecting all relevant financial data, including income, expenses, assets, and liabilities. Once gathered, organise this information into key documents such as the balance sheet, income statement, and cash flow statement. These statements will provide a comprehensive overview of your financial health and performance, enabling you to make informed decisions for the future. Review each document carefully and consider seeking the advice of a financial professional to ensure compliance with accounting standards and regulations.

Setting achievable goals can help you to feel accomplished and good about your situation throughout the financial year. If you’re a sole trader, your goal may be purely financially motivated. For example, if you aren’t happy with how much you earned last year, you can work out what you need to earn in a day, a week and a month before writing down the target. However, if you work for a business that is not your own, you may wish to learn new things to advance your career or take on more in your role so that you can put yourself forward for a pay rise before your next tax return. If this is the case, list out the specific things you need to do or learn and tick them off as you go. Having goals in writing can help you achieve them.

Evaluate your tax situation and consider seeking advice from a certified financial planner or tax professional. They can help you identify potential deductions and credits you may qualify for, ensuring you maximize your return and minimize your liabilities. Additionally, staying informed about changes in tax laws and regulations is crucial, as these can impact your financial planning and obligations. By taking a proactive approach, you can make more informed decisions and potentially improve your overall financial health. Remember, a well-planned tax strategy can lead to significant savings and a more secure financial future.

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