End of Financial Year Tax Checklist for Retailers

30 June. If you’re like many business owners, the mere mention of this date can send you into a mild state of panic (at the very least). The end of financial year comes around ever so quickly and no matter what promises you made to yourself last year about being organised for the next financial year, it’s difficult to keep on top of requirements when you’re busy with the day to day business operations of your ecommerce empire.

So with a little bit of time left before the big day arrives, here’s your EOFY checklist to help ease the burden of tax time.

Key Dates:

• 1 July to 30 June – Financial Year
• 30 June – End of Financial Year
• 1 July to 31 October – Tax Season (yes, it’s apparently called a season)

31 October is technically when you need to submit your tax return but if you’re going through a tax agent (which we recommend) this date can be as late as 31 March (or even later in special circumstances).

| Related reading: The 2018 Retail Calendar: The Key Holiday and Shopping Dates to Boost Sales in 2018

What is EOFY? And what’s it all mean?

The end of financial year heralds the date that your business books close and you need to report to the Australian Government so that you can pay the amount of tax you owe. This reporting process is what you know as a tax return and can be in the form of individual (if you’re an employee or invoice through an ABN in your name), company (if your business is registered as a pty or pty ltd company) or trust (if your business operates under a trust deed with beneficiaries).

What do you need to complete your tax return?

In a nutshell, two things:

1. Profit and Loss Statement (P&L)

This document shows both your income and your expenses. Don’t forget this also includes things like interest earned and depreciation of assets.

2. Balance Sheet

Your balance sheet covers all the items your business owns in the form of assets and liabilities. Items such as cars, tools, stock and cash are assets but it gets a little more complex once you start looking at invoices and bills. An invoice sent to a customer that hasn’t yet been paid is considered an asset and on the flip side a bill you’ve received from a supplier that you haven’t yet paid is considered a liability. And it’s all about timing at this time of the year, so you need to capture where things stand when the clock strikes 12 on the 30th.

What Else Do Businesses Need to do at Tax Time?

Stocktake

If you’re a small business, you may be lucky enough to avoid this one. The ATO requires stocktakes for businesses that turn over more than $10 million. Also if your business turnover is less than $10 million but the difference between your opening and closing stock level is more than $5,000 you’ll need to complete a stock count. It must to be completed as close to the EOFY as possible and include a list that describes each item and its value, who completed it, how and when it was completed and who valued the stock (and what their basis of valuation was).

Superannuation Contributions

Whether it’s for yourself or for your employees, final contributions must be processed by 28 July 2018 (your fund may have an earlier deadline) but if you also want to claim a tax deduction, you’ll need to make sure it’s completed by 30 June to be included in this financial year.

Employees

You’ll need to produce payment summaries for employees that detail how much tax you’ve paid on their behalf. And if you provide non-cash employee benefits such as a car, you’ll need to pay fringe benefit tax on their behalf.

Write-Offs

The federal government allows small businesses to immediately write off asset purchases of up to $20,000. Has your business taken advantage of this scheme? If you haven’t, it might be worth looking into a way you can do so before the end of the year and don’t forget, it covers non-physical assets like ecommerce software too. And just as a side note, the scheme has now been extended to 2019.

This is also the time of year to write-off bad debts and unsellable inventory that’s obsolete, expired or damaged.

Making it easier for your business

The Right Tools for the Job

As daunting as tax time may be for your small business there are a few things you can do to make it a little easier for yourself.

The most important thing is to use accounting software to automate as many steps as possible.

You can use the software to record transactions and manage payroll, plus it’s probably advisable to use an app where you can photograph and record receipts (many of these software tools have their own, or so does the ATO). To make it really work you need to be disciplined throughout the year by recording invoices, assets and expenses as soon as they occur. You should also set up a separate account that’s used only for business and regularly reconcile it against income and expenses.

| Related reading: 6 Tips to Get Your Retail Store Digitally Fit for the New Financial Year (+1 Bonus Tip)

Tax Planning

No one likes a surprise invoice especially if it’s one from the ATO so the best way to avoid one is to plan ahead with your accountant. They’ll use estimates to devise a pay-as-you-go (PAYG) plan and hopefully by tax time, you’ll be pretty well on top of what you owe the government without having paid too much or too little.

More than just tax…

EOFY is about more than just tax time – it’s the ideal opportunity to check-in on your business. Analyse your income and your expenses together with profits and take a close look at your costs per sale and where you sit with your breakeven point. Invest in solid advice from an accountant who can think beyond the numbers on a page and help you grow your business, identify issues and maximise opportunities. To help you prepare for meeting with your tax agent, here are 12 Questions every small ecommerce business owner should ask.