6 essential tax tips to avoid the EOFY panic

This article is a private opinion based on private research and it shouldn’t be considered as advice.

Paperwork for EOFY
Don't get stuck like this! Photo: Elnur, Bigstock

Autumn isn’t just a signal for the looming change in weather, dark clouds form over businesses too as we near the end of the financial year.

Whether your EOFY strategy is about compliance, tax minimisation or just plain survival, there’s plenty of things to do which will make the process less stressful, more helpful and potentially save a lot of money when the tax bill is due.

Having systems in place can alleviate any unnecessary angst according to bookkeeper Janine Parnell. “Tax & GST isn’t difficult to understand, measure or calculate but keeping track of everything can spiral out of control if it’s not done regularly. There have been a lot of new software applications come on to the market in recent years, which has revolutionised the industry, but it also means that many people aren’t familiar with how to work them.”

“One of the ways people can come unstuck is when they need to do something that they don’t know how to in a program like Xero. Perhaps they need to un-reconcile an error, or perhaps a customer has paid an awkward amount and the income needs to be split over 3 invoices with change left over.”

If you’re one of those businesses owners dreading the EOFY headache then use these tips to help streamline the process and gain more control over the process.

Make digital copies of expense receipts

Keep all receipts and save in an online drive and/or attached to the Xero transaction. Businesses no longer need to keep paper receipts as long as proper digital records are kept. Keeping the receipts is just part of the process though – they need to be correctly allocated and reconciled. One of the best ways to keep on top of this is to only use 1 bank card for costs. This keeps all expenses in one place and these can be reconciled daily or weekly.

Keep up to date with reconciling

Balance and reconcile at least weekly – depending on the amount of transactions you have. There’s nothing more overwhelming than seeing 100+ items to be reconciled. Or even 1000+. Not to mention, relying on memory, months after a transaction was processed is far more likely to result in an error and costly time wasted.

Start now

Get ahead of the crowd. June & July are very stressful for bookkeepers because it’s all happening at once. The request for summaries and clarification can get a little out of control so it can take a while to get the information back you require. Get in early, beat the queue and alleviate some of the stress.

Check for over charges and disputes

Check your bank statements for fees you don’t recognise. This isn’t exactly a spoiler alert: Some businesses will charge you any chance they get, even when it’s not correct to do so.

“We had one client recently who was charged $1.06 then immediately $675 for website hosting on a domain which was no longer in use. Luckily we spotted it straight away and were able to get an on-the-spot refund.”

Get expert help

Hire a bookkeeper. Outsourcing experienced bookkeepers has never been easier and probably something a lot more businesses should be doing – particularly the ones who struggle with record keeping. This can be done as an ongoing basis where a supplier may charge a monthly retainer or can be done on an ad-hoc basis when existing personal get behind. Either way, it’s best to work with someone that understands your business, your systems and your staff.

Claim your personal expenses – no matter how small

Personal expenses can only be claimed within 1 quarter after June 30. This means there’s a small window after EOFY to get this organised and it’s very often missed by business owners who don’t know about the rules. Again, the best advice here is to keep every receipt and adopt an approach where you maintain your records. Make sure you keep digital copies.

Another point for confusion is when business owners mix personal and business finances. This can get especially tricky to resolve if a client account hasn’t been set up. The general rule is to keep personal money separate from the business wherever possible, and especially near EOFY.