Of course being prepared for EOFY is very important for ensuring you make the best of your business’ tax return. But, here’s something to think about ……..Would you skip a visit to your dentist and remove your own infected molar?
It’s not unusual for business owners to be uncertain around their financials. So, with end of financial year right around the corner, this is the time for you to be getting organised with your business financials and trying to understand your numbers and, then, if you can’t work out your debtors from your creditor, your assets from your liabilities, then your Accountant is here to help.
To begin with, here is a small checklist for businesses & sole traders to assist you in preparing for EOFY deadlines, so you know where you can claim business tax deductions.
Businesses can claim a tax deduction on most costs incurred in running your business, such as:
• Home Office Expenses
• Office Equipment, Software & Supplies
• Mobile Phone Expenses
• Motor Vehicle Expenses
• Business Travel expenses
• Machinery, tools or computer expenses
• Rental Property Expenses
• Accounting Costs
Quick Tip – You need to have a thorough evidence of these as business purchases – the better your records, the easier this process will be for you, your Bookkeeper and your Accountant.
Getting on to your yearly tasks & paperwork
Get your paperwork up to date and check what tasks you need to complete and. Small businesses may need to complete the following tasks yearly:
• Ensure you have a summary of income and expenses
• Conduct a stocktake as at 30 June, if required for your business
• Review your debtors and creditors for accuracy
• Collate records of any asset purchases
• Reconcile all purchases & expenses in your accounting software or a spreadsheet
• Prepare & check you have lodged all your Business Activity Statements
• Write off any bad debts
• Check you have meet your superannuation requirements for your employees
• Run your Single Touch Payroll Finalisation report
• Prepare EOFY reports for your Accountant
• Prepare your budgets for 2022/2023, based on the results of this year.
Quick Tip – Make digital copies of any paper records and have a backup. The ATO require you to keep thorough records to support your claims for at least 5 years, therefore having digital copies and a backup is important.
Instant asset write-off extension/temporary full expensing
Businesses with an aggregated turnover of less than $500 million can continue to claim an immediate deduction for assets that cost less than $150,000 up to June 20th 2023.
Quick Tip – Now could be the time to upgrade your office equipment and have the cost written off by the ATO. If there are any work-related purchases you are planning to make, you should do it before June 30th to save on taxes.
Claiming Home Office Expenses
Given that COVID-19 has driven so many of us to remote working, it’s likely you’ve invested in some new home office equipment, whether that’s new computer equipment, furniture, other technology, or stationery. Good news, it’s all claimable.
Quick Tip – The ATO has separate guidelines for working from home, running your business from home and small businesses. For more guidance, read what you can claim on home office expenses and how to calculate tax deductions. https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Working-from-home-expenses/
The EOFY relief will then come from you receiving expert, qualified support and the lodgement of your business return. We’ve worked with people who have never sought out the experts (for various reasons), and have found themselves exposed to breaching their obligations.
Knowing you’re on the right track with your EOFY activities will be priceless, and will hold you in good steed for your 2022/2023 year. So, need help to get clear and ready and don’t think you can do it yourself? We’re here for you, drop us an email email@example.com or pick up the phone 03 9853 4359.