10 Top Tips to Get Your Business Tax Ready for the EOFY

It’s the end of the financial year (EOFY). This is the time for your business to file its end-of-financial-year report.

How you file this report can vary between small business owners, self-employed individuals, and sole traders.

Here’s everything you need to know about business tax EOFY and tips to prepare for it.

Best Tips to Get Your Business Tax EOFY-Ready: A Checklist

Here’s a list of what you’ll need for your end-of-financial-year documentation.

1. Have a Record of All Your Annual Tasks

Depending on the type of business you run, there can be a few EOFY documents to prepare. Some of these can include:

• Summaries of your record of debtors and creditors
• Summary of income and expenses in a profit and loss statement
• Completing and lodging your income tax returns
• Conducting a stocktake
• Meeting your superannuation requirements
• Digitising and backing up your paper records
• Collecting the records of your asset purchases or expenditure on improvements to calculate depreciation expense claims for the capital gains tax
• Lodging yearly reports or returns for different tax types, including the fringe benefits tax (FBT), goods and services tax (GST), and pay-as-you-go (PAYG) withholding

It’s best to have a list you can check, with your accountant or tax professional, to ensure you’re complying with all requirements at the end of the financial year. 

2. Be Careful of Tax Scams

Many small businesses tend to be targeted by scammers around tax time. Look out for these common scams:

• Tax Refund Scams: The scammer claims you’ve overpaid and are eligible for a refund. They would ask you to pay an administration fee or transfer costs.
• Tax Owed Scams: The scammer claims you’ve underpaid your taxes and need to repay immediately. They can ask for your credit or debit card details.

3. Ensure Your Tax Agent is Registered

You must ensure your tax agent is registered with the tax practitioners’ board.

You can verify their status by looking for the following:

• Search for their TPB registration
• Check for the registered tax practitioner symbol on their website, stationary, brochure, etc.

4. Have Complete Records of Your Business Income

Reviewing your finances yourself or with your accountant is best.

It will help you understand your financial position and what you can do differently the next financial year, such as taking out a business loan with a company like Lumi.

It will also help you keep track of bad debts and discrepancies, allowing you to file for your business tax EOFY with ease.

Keeping up-to-date is also a way to track your total income and possible tax bill.

5. Stay Updated With Tax Laws and Changes

Your local tax law is often updated to meet the state’s needs. You may need a professional to help you understand these updates.

Keep up-to-date with tax changes to adjust your balance sheet as well.

6. Learn More About Small Business Tax Deductions

Running any establishment with stock, rent, and utilities can be expensive.

Learning to take advantage of your eligible assets can help you save money.

You can file a tax return for the following:

• Prepaid Expenses: If your business has been running for a year or less, you can claim deductions from your ongoing expenses. However, you can’t claim them the following year.
• Instant Asset Write-Off: If your business has an annual turnover of A$5B or less, you could be eligible for an asset write-off if these assets were installed and used before 30 June 2023.
• Depreciation of Business Assets: The tax depreciation rules can be challenging. It’s best to consult with your tax professional. However, you can utilise them as you claim the returns over time.

7. Know Which Tax Deductions and Concessions You’re Eligible For

You can claim deductions for most of your business expenses as long as they directly relate to your business structure and operations.

Some of the most common examples are:

• Operates at home
• Travel expenses
• Has a working website
• Uses tools, machinery, or computers
• Has motor vehicle expenses
• Uses diesel fuel

If you work from home, you can also get a tax refund from your home office expenses. You can compute for them through the following methods:

• Flat hourly rate: 80 cents per hour worked from home
• Hourly rate (plus bills): 52 cents per hour plus a portion of your household bills (internet, power, etc.) for a more significant deduction
• Per percentage rate: Depends on the total of your expenses

It’s best to check with your accountant or tax professional to understand which method would be best suited for your personal situation.

8. Review Your Business and Marketing Plans

The time for business tax EOFY can also be used for reviewing your business’ performance for the year.

Research emerging trends and how your business can adapt to them. Know which strategies should be continued or changed. Make the most of new opportunities to grow.

9. Re-evaluate Your Business Structure

Your goals can change as your business grows and expands, and you might need to restructure for the next financial year.

Note that there’s a difference in tax compliance when you’re a small business versus a sole trader. Changing your business structure can affect what you need to pass for your business tax EOFY.

10. Check Your Insurance Policies

You might need to update your insurance coverage. Read through all the documents, and don’t assume you’re covered without confirming.

Importance of Business Tax EOFY Compliance and Taxation Regulations

From 1 July to 31 October, all small businesses and individuals must submit their tax returns to the Australian Taxation Office (ATO).

You must complete your tax obligations to avoid additional fees or stopping operations.

We recommend updating your documents on assets and other transactions to stay prepared. However, tax changes can also occur, so you’ll need to watch out for that as well.

FAQs

You may have more questions about business tax EOFY.

We’ve gathered the most common ones to help you better prepare for it.

Can an End of Financial Year Business Loan Help With Tax Deductions?

A business loan could potentially be claimed as an instant asset write-off, making it eligible for a tax return.

A business loan from Lumi is a great way to get the assets you need while maximising the possible tax return you can get from your income.

If the asset you’re getting a loan for has been purchased, delivered, and installed by 30 June, it should be eligible for business deductions.

Can I Claim Super as a Tax Deduction?

Yes, you can claim deductions for super payments made as personal contributions. However, they need to be done before 30 June.

Conclusion

Tax time is a great time to review your income and how you can improve your financial management.

As you plan for the financial year ahead, take this as a chance to let your business grow and get ahead of your industry.