Preparing for EOFY 2020
Being prepared for EOFY is very important for ensuring you make the best of your tax return. Here is a small checklist for small businesses & sole traders to prepare them for EOFY deadlines.
Find out where you can make tax deductions
Small businesses can claim a tax deduction on most costs incurred in running your business, such as:
• Home Office Expenses
• Office Equipment, Software & Supplies
• Mobile Phone Expenses
• Motor Vehicle Expenses
• Business Travel expenses
• Machinery, tools or computer expenses
• Rental Property Expenses
• Accounting Costs
Important Tip - You need to have a thorough record in place as evidence of these as business purchases – the better your records, the easier this process will be.
Getting on to your yearly tasks & paperwork
Check what tasks you need to complete and get your paperwork up to date. Small businesses may need to complete the following tasks yearly:
• Write a summary of income and expenses
• Conduct a stocktake as at 30 June, if required
• Complete a record of your debtors and creditors
• Collate records of asset purchases
• Reconcile all purchases & expenses in your accounting software or a spreadsheet
• Lodge your income tax returns
• Prepare & file your Business Activity Statements by the due date
• Write off bad debts
• Check you are meeting superannuation requirements
• Lodge your yearly reports or returns for PAYG Withholding, Fringe Benefits Tax, Goods & Services Tax
• Speak to your accountant for getting your business-specific advice.
Important Tip - Make digital copies of any paper records and have a backup You are required to keep thorough records to support your claims for at least 5 years, therefore having digital copies and a backup is extremely important.
Stimulus package - Instant asset write-off expansion
From 12 March until 31 Dec 2020 the instant asset write-off threshold has increased from $30,000 to $150,000, for businesses with an aggregated turnover of less than $500 million. Businesses can now claim an immediate deduction for assets that cost less than $150,000.
Important Tip - Now could be the time to upgrade your office equipment and have the cost written off by the ATO. If there are any work-related purchases you are planning to make, you should do it before June 30th to save on taxes.
Claiming Your Home Office Expenses
Given that COVID-19 has driven so many of us to remote working, it’s likely you’ve invested in some new home office equipment, whether that’s new monitors, printer, furniture, tech, or stationery. Good news, it’s all claimable.
Important Tip - The ATO has separate guidelines for working from home, running your business from home and small businesses. For more guidance, read what you can claim on home office expenses and how to calculate tax deductions.
Strategic Planning For The Future
Planning for the future is an important part of your EOFY checklist. You can compare how your business has performed compared to previous years, forecasts and expectations, and plan what you would like to achieve in the next financial year and beyond. Now is a good time to:
• Create a budget
• Review your finances
• Review business and marketing budgets
• Review business structure
• Review OH&S and operational policies
• Review your business insurance – is your level of cover sufficient?
Important Tip - To make the process simpler for next year, ensure you are recording new assets, bills, and expenses as soon as they are received.
Disclaimer: The content provided above is not to be taken as professional advice. Please contact your accountant for all details.