End Of Financial Year In Australia: What Business Owners Need To Do

The end of the financial year is less than a month away. As a business owner, you need to make sure you’ve fulfilled certain requirements by 30th June.

Failure to comply with legal requirements may result in unwanted consequences, including monetary penalties, a loss of tax benefits, an investigation by tax authorities that may lead to legal action, and trouble securing credit with lenders in the future. You might also miss out on some significant tax deductions.

In order to avoid these unfavourable outcomes, it’s essential that you know what to do before the end of the financial year. In this article, we’ll take you through a checklist of the most important steps to take, to ensure you’re prepared as a business owner in Australia.

Fulfil Your Financial & Tax Obligations

With the end of financial year 2024 fast approaching, it’s important to get your papers in order. Make sure you have an accurate profit and loss statement ready that encompasses your business transactions throughout the financial year.

You also need to conduct a stock take, which is a valuation of all the trading goods you have on hand. This information is calculated into your income tax returns for the financial year, and will include detailed descriptions of the types of stock in your inventory, the date the stocktake was performed, your measuring and valuation methods, and who was responsible for performing it. A stocktake can be fairly time-consuming, so you might want to close your shop doors while you’re conducting it, to give it your full attention.

The end of the financial year is also the time for managing your taxes. Before the deadline, you need to calculate your income tax returns by subtracting deductible income from the total income you’ve made during the financial year. You’ll also need to compute your capital gains tax on assets like land and shares owned in other companies.

Now is the time to submit reports and returns for other types of tax for the financial year gone by. These can include fringe benefits taxes and goods and services taxes.

File For Tax Deductions & Concessions

There are a number of special tax deductions and concessions available to Australian businesses, especially smaller ones, that decrease the amount of tax you need to pay. You can also get a tax deduction on a wide range of expenses, as long as you can prove they were work-related.

This can include certain travel expenses, the cost of setting up a website, the cost of installing and running machinery in your factory – or computers in your offices. These are all components that can be qualified as essential to the operation of your business.

In order to qualify for these tax deductions, you need to keep detailed records of individual business transactions for at least five years. What these records look like will depend on the specific expense in question. For example, to claim a deduction on a business trip, you’ll need to preserve tickets, boarding passes, tax invoices, and trip itineraries. For motor vehicle expenses, you need to record the vehicle’s registration documents, travel details, gas station receipts and more.

Beware Of Scams

The end of the financial year is rife with scammers trying to make an easy buck off your business. If you’re working with a tax agent (which we recommend to guarantee accuracy and peace of mind), make sure you’re working with someone legitimate. Tax agents are a special class of accountants whose role is to help businesses fulfil all their tax requirements and receive all tax deductions available to them.

Be careful of individuals or groups masquerading as tax agents. A legitimate agent will be registered with the Tax Practitioners Board and you should be able to find them on the official database. You should also do your own due diligence by scouring their website, office, and promotional material.

Two categories of scams to look out for are those claiming they can get you a (better) tax refund if you pay them an administrative fee, and those claiming you’ve underpaid your taxes and asking you to transfer them money. Do research and trust your instinct: if something smells fishy, it probably is.

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The end of the financial year can be a stressful time for business owners, especially those in charge of small-to-medium enterprises that don’t have a large accounting department to rely on. Besides being a good time to take a step back and review your progress and future plans, it’s also when you’ll need to consolidate your financial statements, file your returns and claim your tax deductions and concessions.

The key to a smooth end of financial year 2024 is preparation. Gather the documents you need as early as possible, find a reliable tax agent to work with and perform a stocktake of the goods in your inventory. Be wise to potential scams, as there are plenty going round at this time of the year.

Following the steps we’ve outlined in this article will go a long way to ensuring a successful, stress-free end of the financial year 2024.