End of financial year (EOFY) is upon us again. As stress builds ahead of 30 June, vital time is taken from the tasks that matter to your business. But it needn’t be that way – and here’s why.
It’s that time of the year again: EOFY. As the clock ticks past 30 June, another financial year is behind us and business owners need to wrap up their books. The ATO will be expecting your tax return within four months, and the road to this moment has traditionally represented a stressful period for small business owners as they race to organize all of their financial records.
Reflecting on performance in the previous 12 months should be an opportunity to celebrate achievements and, hopefully, growth, but instead it has been seen as an anxious period when precious leadership time is detracted away from core business tasks. As a statutory requirement, mistakes must be avoided, and reconciling so many records is highly arduous.
Owning a company can involve a lot of pressure at the best of times, so it’s easy to see why EOFY is not a favorite pastime of small business owners. However, the days of handing over shoeboxes filled with invoices and receipts and waiting for your accountant to come back with a large list of difficult questions are over. The rise of cloud-based accounting software has made bookkeeping a far more palatable and seamless task while also simplifying the dreaded EOFY.
Reconcile your accounts
A company’s financial accounts must tally accurately with all invoices, bills, statements, receipts, dividends and payroll information. Orders not yet paid before year-end should be included as outstanding debtors. Accounting software allows you to record all records digitally throughout the year. This not only saves enormous time when EOFY arrives, but also gives you a constant assessment of your company’s health. A lot of business owners historically only knew if they’d made money at EOFY. Accounting software changes that and enables you to better strategies.
One of the most powerful features within accounting software platforms is the ability to automatically reconcile records against synced bank feeds, streamlining bookkeeping while also assisting with BAS, the form you return to the ATO to report your tax liability or claim a refund. Accounting software can automatically calculate the amounts that appear in each box on the BAS, based on information collected in the system, and you can ensure you haven’t missed anything by running your BAS report for the year and deducting what you’ve already reported.
Scrutinise for errors
The onerous nature of manual bookkeeping means that so much time is given to simply gathering and organizing records for EOFY that by the time your accountant comes back with questions querying accuracy, the tax return deadline is getting anxiously close. This could include sales orders which should have been converted to invoices, expenses wrongly allocated to the asset accounts or transactions which don’t match with the category they should be in.
Accounting software will significantly reduce the occurrence of these kinds of errors. And when they do still occur, it will make it far easier to notice discrepancies and quickly correct them. For example, if there are any duplicates in accounts receivable or payable, or there are negatives in any accounts, accounting software will immediately flag them. You should still take a moment to check if there are any outstanding bills of expenses that should be settled before your year-end.
Manage your deductions
As long as they relate directly to your business and sales, you can claim tax deductions on most expenses. However, it’s important that you are able to prove all of these expenses, so recordkeeping is a must. A cloud-based software solution, which you can access seamlessly from your phone, allows you to manage expenses and deductions throughout the year, rather than scrambling at EOFY to identify the transactions which will help bring down your tax liability.
EOFY has always been seen as a good time to purchase new equipment, as you can very quickly claim the resulting tax deduction. By freeing up arduous accounting time, you may instead wish to spend some time considering which strategic technology purchases could allow you to streamline processes in other parts of your business. Now is particularly opportune because a higher threshold for the government’s popular instant asset write-off scheme for small businesses, from $30,000 worth of asset purchases to $150,000, will run to June 2023.
Other ways to save on tax include prepaying certain expenses for 12 months or less, such as utilities, rent, wages and insurance, or claiming back tax you’ve already paid on what has turned out to be bad debt (if you pay GST on an accruals basis). Businesses which have employees whose salary sacrifice into a superannuation fund, and meet their superannuation guarantee obligations by 30 June, can claim a tax deduction in this year’s tax return rather than next year.
Remove stress, liberate your time
The government’s introduction of Single Touch Payroll (STP) has greatly simplified the process of completing payroll activities for EOFY. But companies can go further by automating accounting and bookkeeping processes to ensure EOFY is a breeze. Jcurve ERP, the small business edition for NetSuite ERP, is specifically designed to meet the needs of growing businesses and free up time for small business owners by streamlining back-office processes.
Businesses that use Jcurve ERP gain essential visibility into their financial performance throughout the entire year, with fully integrated accounting and payroll functionality which then makes EOFY easy and seamless when that time comes. Errors from manual data entry are eliminated, expenses can be quickly uploaded via your mobile device and then automatically matched to common spending categories, and bank transactions are seamlessly reconciled.
All this means that when EOFY time begins to approach, business owners are no longer filled with dread but rather excitement at signing off on another year and beginning a new one. And because the functionality is part of a wider ERP platform, companies can also benefit from other solutions such as real-time stock visibility for managing inventory, automated sales processes including upselling, quote management and forecasting, and customer management. By taking back control and freeing up time, you can focus on what really matters: growing your business.