Lousy record-keeping and lack of preparedness can make or break a business, especially at tax time. Being disorganised can mean your business misses out on valuable deductions, wastes time on unnecessary paperwork, or even gets slapped with crippling fines. Based on a Freedom of Information request we filed, Australian businesses paid around $60 million in fines for late tax returns for the 2014/15 financial year, with many SMEs making avoidable errors that can cost big down the line. By following some simple tips to improve your EOFY processes and avoid fines, your business can simplify its record-keeping and make sure it’s in strong shape to finish the year.
Beat the rush
End of Financial Year can be a real pain point for many small businesses, and it can be difficult to find the time to get all your records in order in time to avoid fines. While it might seem simple, start now and follow a checklist to get your records in on time. The important things to start with include:
- Reconcile everything, including wages to the general ledger, balance sheet accounts, ATO and GST accounts, and (if necessary) suspense accounts.
- Collect all receipts and supporting documentation, and keep a copy for your records. If you’re using cloud accounting software, you can easily scan or take a photo from your mobile device.
- Order your assets, making sure to mark off those no longer current.
- Get your super and payroll sorted, making sure to pay any super liability balances due before 30 June so they can be taken up as a tax deduction this financial year.
- Review your uncleared transactions, preparing your statements ASAP.
Accountants and bookkeepers love clients who provide bank and credit card statements to the end of June and as soon after month end as possible. By following a checklist of items to reconcile and review, any business can stay ahead of the curve, get their accounts in order on time and avoid late fines.
Understand new rules and regulations
The shift to digital is increasing across Australia’s business landscape, with Government bodies such as the ATO spearheading data automation. These new standards in tax and superannuation can be a confusing sticking point for EOFY reporting with improper record-keeping putting businesses at risk of further fines.
For example, digital superannuation management platform SuperStream has been mandatory for all employers with 19 or fewer employees since July 2016, but research by the Australian Tax Office in 2015 showed that a third of businesses weren’t prepared for the change, or even knew what SuperStream was.* Leaving big changes to your business until the last minute can open you up to penalties. Staying up to speed with government instructions, familiarising yourself with digital and getting online sooner can keep your records and business in good standing.
Streamline the process for next year
If you’re finding EOFY a pain, reevaluate how you’re maintaining your books throughout the year. Despite strong take-up of cloud accounting in Australia, there are still many small businesses not using this technology or taking advantage of the business efficiencies on offer. Assess what’s caused you a headache this year, and speak to your accountant or bookkeeper about what you can do to automate it going forward. You’ll save time and make your bookkeeper or accountant’s life a lot easier.
The start of a new financial year is the logical time to move to cloud accounting and now is the time to prepare. Migrating to technology that will automate data entry and speed up financial management will pay dividends in 12 months’ time.
* Australian Taxation Office. Superannuation Reform Final Report: https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/SPR_SuperStream_Reform_Report.pdf
Nicolette Maury, Vice President and Country Manager, Intuit Australia
