According to the old adage, time flies, and it really does when you run a business. June is a hectic time in business. End Of Financial Year (EOFY) is just around the corner. Here are 6 Business Tips for EOFY. These will help you successfully complete this year’s financial duties. Additionally, they will also set you up to start the new financial year on the right foot.
1. WRITE OFF BAD DEBTS
Debt that cannot be recovered or collected from a debtor is bad debt. Bad debt can be written off for the EOFY using either the direct write-off method or the provision method. The first approach tends to delay recognition of the bad debt expense. It is necessary to write off a bad debt when the related customer invoice is considered to be uncollectible. Otherwise, a business will carry an inordinately high accounts receivable balance that overstates the number of outstanding customer invoices that will eventually be converted into cash.
2. PAY YOUR DEBTS
Similar to the above, it’s crucial to make sure your own bills are all accounted for before EOFY. Hopefully, your payments are already up to date. But, as part of your EOFY preparation, you may need to finalise any invoices you’ve left to the last minute. Also, chase down invoices from contractors or clients who are slow to send them over to you.
3. DUST OFF THE PAPERWORK
Having all your records in order is essential for a smooth EOFY process. So compile the following essential EOFY business documents to ensure they’re ready and accessible come tax time. You will need:
- All Receipts for Income and Expenses
- Business Activity Statements (BAS)
- Employee Super Contribution Records
- Tax Return Paperwork for EOFY
Probably not what you want to be doing right now at EOFY. But it is important. The first step to any successful stocktake, make sure everything is in its place. That is, as much as it can be. The second step, go through all your work spaces, vehicles and stockrooms to see if you can find any materials that may have gone “missing” over the last year. Once you’ve got it all in order, figure out what stock is still usable, how much of it you have on hand, and if any stock is damaged or out of date. Remember, you might be able to write-off or write-down damaged materials to save on tax.
5. SPEND MONEY ON TRAINING
Have you been thinking of upskilling your team? Now’s your time. Business expenses on training and professional development purchased before the end of financial year can help reduce your taxable income.
6. STAY IN THE KNOW
The new financial year can bring fresh tax and employment changes that you’ll need to comply with. Do your research or ask your accountant if there are any changes you need to be aware of and what they could mean for your business. It’s best to be prepared. Changes such as an increase in the minimum wage could have a big impact on your financial forecasting for the new financial year.