The end of the financial year (EOFY) is coming up in June, and it’s best to be prepared ahead of time so you aren’t feeling overwhelmed when the deadline hits. With the right paperwork and knowledge on hand, you can stay on top of what needs to be completed for your small business, which in turn can set you up for a smoother start to the new financial year.
Getting ready for tax season
Starting early with a planned approach will give you the best chance of meeting your EOFY commitments. Work can already be full-on, so spending your nights in front of your computer jamming in extra hours before the deadline is not ideal. Why not start chipping away a little bit each day, so it doesn’t feel as overwhelming? That’s where we’re here to help!
So, what is the meaning of EOFY? EOFY stands for the ‘end of financial year’. This is when the Australian Tax Office requires business owners to share records of all financial transactions they entered from 1st of July – 30th of June, anything from how your income was determined to the expenses that were incurred. Finding that specific documentation ahead of time can help you maximise tax returns and give you optimal time to research tax efficiency techniques.
Over the year, there are sometimes tax changes from the ATO that may affect your business structure, so checking the website to make sure you are still complying with the most recent guidelines is critical. Taking time to prepare will reduce stress and make tax season easy for you and your business.
EOFY checklist for small businesses
All small businesses need to be aware of EOFY. Let’s check out our top 5 preparation tips for this time of year.
1. Have your documents ready
As mentioned earlier, keeping all your documents organised and in one place can make the process much easier. Rushing at the last minute can be overwhelming, so instead, take the time to gather the following documents in advance:
- Any receipts for income and expenses
- Business activity statements
- Employee super contribution records
- Tax return paperwork
Keeping these documents in a secure place, whether you choose to print them or store them digitally, will simplify the entire experience. Once the time comes to submit, you’ll have it all ready to share.
2. Write off and pay your debts
If you have unpaid invoices from the last financial year that you know won’t be paid, you can write them off as bad debts, which will reduce your taxable income.
If clients haven’t paid you, it’s important to deal with it. To encourage clients to pay on time, consider offering a small discount if they settle before the financial year ends. You can also use accounting software, such as Xero, to send automatic reminders to customers with overdue payments.
On the other hand, ensure you’ve paid off any outstanding debts and follow up on any invoices you’re still waiting to receive from contractors or clients.
3. Claim your tax deductions and write off any assets
As a small business, you can deduct the costs of running your business from your taxable income, reducing the amount of tax you owe. This includes expenses for business supplies, services, and depreciation of your business assets.
For your assets, take time to identify what you can claim and keep proper records to potentially bring money back into your business. Be careful not to mix personal bills with business expenses, and double-check with the ATO before claiming at-home expenses.
If your business has superannuation guarantee obligations, meeting them before 30 June allows you to claim a tax deduction this financial year, rather than waiting until next year. There’s no limit on deductions under the Temporary Full Expensing (TFE) scheme, so be sure to check if you’re eligible here.
4. Determine if your business is eligible for income tax offset or tax benefits
If you’re operating as a sole trader, in a partnership, or receiving income from a trust, and your business has a turnover of less than $5 million, you may be entitled to an income tax offset of up to $1,000.
What does this mean?
The ATO will calculate a proportion of the tax you owe on your business income. It’s important that all your earnings are up to date when you lodge your tax return. Once processed, the offset amount will be shown on your notice of assessment.
If your small business has a turnover of less than $2 million, you’re eligible for several tax benefits, including:
- Capital gains tax exemptions
- Goods and services tax (GST) benefits
- Income tax breaks
- Fringe benefits tax relief
5. Be on top of statements and reports
Lastly, it’s crucial to stay on top of deadlines and avoid ATO penalties. Mark important dates, such as these, in your calendar to make sure you submit your paperwork on time. If you’re unsure or need assistance, consider hiring a financial advisor or accountant to help you through the process. The ATO also offers a support page for employers that you can access here.
Strategically plan out your next year
While it’s important you submit your previous year’s information, it’s also vital you start planning for the future of your business for the rest of 2025. Take time to reflect, revise, and improve, so you go into the second half of the year stronger than ever.
Think about what you want to achieve in the next 12 months by analysing these areas:
- Business Plan: How is your business plan currently working? Does it clearly outline your plans for the future and detail what success looks like for your business? If it needs a refresh, what ways can you change it depending on the markets you serve and the products or services you sell?
- Business Insurance: Is the amount of cover working well? Speak to an insurance broker if you need to get more or less cover.
- Operational Health and Safety Policies: Are your current policies reflecting your current ways of working? Are your employees and equipment following the guidelines?
- Financial Update: What’s the status of your finances? Are you staying afloat? Are you getting a ROI? Are your loans getting paid off? Do you have credit cards that need to be paid?
When you take time to reflect and adjust, you’ll set yourself up for success.
Conquer tax season with confidence
Tax season doesn’t have to be daunting. Often, it’s just the new or changed information that feels overwhelming. But with the right tools and a bit of extra time, you’ll be more than prepared to take on this year’s tax season with confidence and ease.
Our community here at Melbourne Connect Co-working is all about improving the lives of small business owners, innovators, and entrepreneurs. If you’re looking for a quiet space to get your taxes done or a new environment to grow into, we have a variety of office and desk spaces available to suit your needs.