The words ‘June’, ‘end of the financial year’ and ‘tax time’ often strike fear in the hearts of business owners. Although the end of the financial year can be a very daunting and stress-inducing time, it doesn’t have to be. When you invest in the services of a bookkeeper and an accountant, you put yourself in the best position to make this a routine, yearly process.
To make it even more simple, we’ve created an end of financial year accounting checklist for you and your business. Follow the steps below and be ready to welcome in the ‘business New Year’.
1. Organise your files and reconcile your books
- Reconcile or send your bookkeeper all your outstanding receipts and documents for the financial year. If you have a glove box full of receipts in your car, it’s time to clean them out!
- Ensure all the invoices for the work you have done and products you have sold for that year have been sent and paid. If there are outstanding invoices, chase these clients up so everything for the financial year is settled.
2. Perform a stocktake and stock valuation
- (only complete if applicable to your business).
3. Lodge your Business Activities Statement (BAS) for the year
- These must be done quarterly or annually, if applicable to your business, and are something your bookkeeper can assist you with.
4. Ensure your payroll and superannuation payments and obligations are complete and up to date
- This includes providing your employees with payment summaries.
- This is another area your bookkeeper can be of assistance.
- Use this as an opportunity to check that salaries are in line with the relevant awards and statutory requirements.
5. Prepare your end of financial year accounting reports and documents
To lodge a tax return, you or your accountant will need the following documents:
- Profit and Loss Statement – shows your business overall profit or loss for the year.
- Balance Sheet – displays your company’s assets and liabilities.
- Statement of Cash Flows – shows all transactions affecting your business’s cash account.
- Your previous year’s tax return.
If you have a bookkeeper, they can create and provide these reports for you.
6. Fill in and lodge your tax return
This is where an accountant’s services can transform end of financial year accounting and tax procedures from something nightmare-like to a smooth and painless process. They can take all the above information, reports and documents to fill out and lodge your return for you.
7. Review your financial year and plan for the future
The end of the financial year is a good time to take stock of your business and review your practices. Rather than letting it go past as another time of taxes and forms, use the end of the financial year as an opportunity to set yourself up for success in the next year.
You can do this by:
Reviewing your finances
With all your accounts reconciled and reports complete, this is the best time to review your financial situation. It is a chance to see whether you met your targets and what you could do differently in the next financial year. Create a cash flow forecast to prepare for any potential obstacles and shortfalls you may face in the coming year to ensure you will be able to afford to manage your costs and continue operations. Your accountant can also offer advice on your situation and outlook.
Reviewing your business
Look back at your previous year and remind yourself of the goals and priorities you had. Question if you achieved them and consider the reasons why you may not have.
Three invaluable questions you can ask to assess your business and begin planning for the next year are:
- What should I keep doing?
Look at what is working in your business. What are the practices and strategies that have a high return on investment and are bringing in profits?
- What should I stop doing?
Assess your business for areas that are not functioning to capacity. Are there any drains on your time and finances that are not profitable or a good investment? Have there been changes in your area of work that you need to adapt to? Prioritise and maximise your time and money – work smarter, not harder!
- What should I start doing?
Consider the opportunities in your industry and the changes in your environment. Are there new prospects or opportunities you can maximise in the new year?
Use this assessment to make yourself clear goals and targets for your business in the coming year.
While tax forms, reports, budgets and paperwork can seem endless and sometimes overwhelming, this is where having a bookkeeper and an accountant can really help. This is our speciality, so to find out the services we can assist you with, contact us today.
End of Financial Year Accounting Resources
To find out more about end of financial year accounting for businesses, further reading on this topic can be found here:
- The Australian Government Business Services – Essential Tasks at the End of Financial Year