Around June each year, the word ‘tax return’ strikes fear into the hearts of business owners up and down the country.
It’s a routine task that comes at the same time every year, yet it's prompt arrival still manages to take us by surprise. But with the pandemic piling the pressure on Australian businesses to get by with minimal resources - forcing many to self-submit - this year will have been more painful than most.
Just two months on, the stress of filing FY21 tax returns is still fresh in the minds of many business owners small and large. While the memory is still raw, now is the perfect time to put the necessary processes in place to ensure next year’s tax submission is the most pain- and stress-free yet.
Manage your paperwork
There’s a lot of paperwork business owners need to navigate at EOFY. Although a reconciliation will help identify some missing links at the end of the financial year, knowing which documents you need to keep a record of will help save a significant amount of time when June 2022 rolls around. Ensure that you’re keeping up-to-date records of:
- sales receipts and transaction records
- invoices and receipts for purchases made using business funds
- payments to employees and contractors
- all records concerning tax returns, activity statements, and employee super contributions
- GST returns
- JobKeeper paperwork
Run regular financial reports
Your profit and loss, balance and cash flow statements are critical to giving you oversight into the financial health of your business and they provide you with the insight necessary to make budget and planning decisions. Running regular reports on your financial statements will help flag any warning signs that may prompt you to revisit your business plan, and catch any potential issues in their infancy.
Your financial advisor can also use these reports to provide advice to help grow your business in the upcoming year. They can help determine your goals for the next 12 months or what areas you want to improve or change. This is also an ideal time to establish a new set of financial performance goals. Were you able to meet last financial year’s targets? What do you want to achieve? Once you’ve asked yourself these questions, update your budgets for the next 12 months accordingly.
Improve your financial technology
The right financial technology can help you both improve your sales, and more efficiently manage your reporting obligations.
There may be some easy ways to improve your business's finances that you haven’t thought of, such as recovering debt, rearranging your expenses, selling unneeded assets, or consolidating debt. You can also consider reevaluating your EFTPOS technology provider to ensure you’re getting the fastest possible settlement time as well as the most affordable processing rate.
Far from being just a vessel by which to accept payments, an EFTPOSterminal should be working harder to also help you manage your funds. The better your financial technology is, the slicker your processes will be. Look into a solution that accepts every card type at a low, flat processing rate (rather than variable costs for different card types); one that gives you access to real-time transaction reporting that enables you closer visibility on business sales performance; and one that settles funds to you daily (rather than several business days into the future) to ensure your cash flow is as fast as possible.
If you haven’t already done so, consider also separating your personal bank account from your business bank account. Capturing all business expenses in one place will make every EOFY reporting simpler, as well as making cash flow management a lot cleaner.
Calendarise all due dates
Though all businesses are required to lodge a tax return, the date by which you must submit depends on your business structure.
- Sole traders lodging their own tax return can do so from 1 July to 31 October each financial year. Sole traders lodging their tax return through a registered tax agent should contact their agent for more information.
- For businesses operating as a partnership, tax returns can be lodged from 1 July to 31 October each financial year. Again, however, if a registered tax agent is involved they should be contacted for more information.
- Company tax returns lodgement dates vary. The majority of company tax returns will be due 28 February each financial year, however we recommend you check the ATO website for your specific date.
While some of these tasks may seem monotonous, they are essential boxes to tick so that you can hit the next financial year running. With businesses weathering every storm the last year has thrown at them so far, the last thing they need is to be put under additional pressure come the end of the financial year.
Tax time doesn’t have to be stressful as long as you keep your records up to date, regularly review your finances and keep to your deadlines. By making these tasks habits, eventually you might not even notice you’re doing them!