Want to save time and effort down the track with your accounts? Not sure how to close off the financial year?

Here’s a guide for getting your accounts in order that’ll make year-end quicker and easier.

1.       Payroll checks

Ensure the amount of wages in the profit and loss statement matches total wages in the payroll system and wages reported in BAS’s. If not, reconcile and work out the difference so any correction can be made in the June 2018 BAS.

 2.       Bank reconciliations

Ensure the bank balances in the accounting system can be reconciled with the bank statements. If not, the sooner it’s reconciled the better as any correction may affect the June BAS. It will also allow you to accurately calculate the profit and tax now. Save a pdf copy of the bank statement for easy reference for the tax accountant.

 3.       Superannuation payments

a.       Ensure you haven’t contributed more than $25k to your super fund that you wish to claim as a deduction.

b.      Pay all employee superannuation prior to 30 June to ensure it can be claimed as a tax deduction in the 2017/18 tax return.

4.       Debtor write-offs

Where applicable, write off any bad debts. Note that you can’t simply write-off debts that you think might be bad in order to claim a tax deduction. You must have taken reasonable steps to recover the debt. See http://bit.ly/2tdgfz5 for the ATO ruling on writing off bad debts.

5.       Creditor review

Similarly to reviewing debtors, review the creditors in your accounting system and ensure that all are accounted for properly. If for some reason there are creditors that won’t be paid, adjust the accounts with the adjustment dated on or prior to 30 June.

6.       Loan and hire purchase interest

Ensure you have loan and hire purchase statements that show the interest paid for the whole of the financial year and the balances at 30 June 2018. Make any necessary adjustment in the accounts to reflect the interest expense or ensure your bookkeeper or accountant does this.

7.       Stock

If your business carries stock, ensure it is valued at 30 June. Note that if you are a small business under the ATO rules (revenue less than $10M), you don’t need to value stock if there is a difference of $5,000 or less between stock at 1 July 2017 and a reasonable estimate of stock at 30 June 2018 (see http://bit.ly/2yoXI82 for full ATO guidance).

 If you do need to value stock, you can choose to value it at either cost, market value or replacement value.

8.       Motor vehicle expenses

Ensure log books are up to date with 12 consecutive weeks of records kept in a log at some point over the last 5 years (assuming similar patterns of vehicle use over this period). Take the odometer reading at 30 June. If you have multiple work vehicles, ensure the costs for each vehicle can be itemised so you can accurately calculate any private-use adjustment for each vehicle.

9.       Trust Distribution Minutes

If you are using a trust, ensure trust distribution minutes are signed and dated prior to 30 June 2018.

10.   Asset Purchase Documentation

Ensure all asset purchase documentation is on hand, so depreciation can be calculated or the $20,000 instant asset write-off can be taken advantage of.

11.   Private Expenses

Ensure all private expenses that may have gone through the accounts are adjusted and not claimed as expenses. 

12.   Saving tax

Check out the guide to saving tax at http://www.morrisonabs.com.au/16-end-of-year-tax-planning-essentials-for-business-owners/

Summary

There’s a lot to think about at year end. If you can get organised now, it can save a lot of hassle down the track. If you need a hand with anything tax-related, let me know. Our tax programs take the pain out of tax and our programs are courses are designed to make business owners great financial managers. Check them out and good luck with your financial year end.