2020 EOFY (end of financial year)
The end of financial year is fast approaching, and so is your chance to carry out essential EOFY reviews and action for your small business.
Here is a short guide to some key considerations to take before 30 June 2020:
1) Small business instant asset write off:
Let's start with the SBE accelerated depreciation rules, also known as the instant asset write off. Eligible businesses can claim outright deductions for assets purchased and installed prior to 30 June 2020, now up to $150,000 per asset item.
2) Single Touch Payroll:
All businesses, small and large are now required to report their payroll via STP, with the only exception being closely held employees, such as Directors of companies, family members, trust beneficiaries. Recently and extension for these categories was granted to 30 June 2021.
3) End of financial year tasks:
If your business has trading stock, now is the time to organize your EOFY stocktake, make sure to have enough man(women)power on hand to carry out this task.
Review any obsolete stock as to whether it should be liquidated or written off.
Review your accounts receivable (creditors) and accounts payable (debtors). Are there any customers who are unlikely to pay, if so, their balances can be moved to doubtful debts, or if they are not recoverable claim them as Bad Debts. Are there any customers for whom you can defer the invoices to 1 July so that the income does not have to be recognized this financial year.
Review your accounts payable to see if any prepayments can be made, eg insurances, stock purchases, interest etc
Get started on reconciling your accounting software, get it right up to date so you can make informed decisions about what potential tax strategies can be employed between now and 30 June.
Check that all your receipts are in order, you can only claim tax deductions for expenses that you have receipts for, so if you are missing any, start contacting suppliers for copies.
Make sure all superannuation guarantee payments are made prior to 30 June, as only actual amounts paid will be claimable in your business tax return.
For individual tax payers, evaluate if you want to make a concessional (deductible) super contribution prior to 30 June to reduce your taxable income. Keep in mind work test and max. contribution limits apply, these also depend on your current age.
Do you need to organize or update a depreciation schedule for your investment property, if yes, better get started and contact your preferred provider.
And don't forget, the best strategy starts with asking your advisor!
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Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas.
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