With two weeks to go until the end of the financial year, here are a few tips to take the stress out of a busy time of year for businesses.
Talk to your accountant before year end.
You need to start thinking and planning about tax early. Your accountant is there to give you advice on your specific business requirements so give them a call now. Keep in mind that any fees you pay to them are deductible too.
Make sure your records are up to date.
By using a cloud based accounting software system such as Xero, you will find it much easier to keep track of your financial position. “The Cloud” in an online platform to make accessing your data simple anytime, anywhere and from any device.
Ezebiz Accountants are Xero Gold Partners meaning we are highly qualified to help you set up and use Xero. This means that we can work with you at the same time to resolve any problems you have as soon as they happen so you don’t get any nasty tax surprises at the end of the financial year.
Keep in mind that all expenses you want to claim need to be supported by the correct documentation like invoices or receipts. A great way to do this is to take photos or scan your financial papers throughout the year. It will save a lot of time and make things easier for your accountant so you can get your financial statements back quicker. Remember, it is a legal requirement for you to keep business financial records for seven years, so going paperless makes for much easier storage. Backing these up on an external hard drive is also a good idea.
You need to know what expenses you can and can’t claim against your taxes. We spoke about this in one of our previous blogs, so if you’re unsure, contact your accountant to discuss claiming expenses. Things like office supplies such as printing and stationery costs are usually 100% claimable, whereas you can only claim a portion of your home office costs.
Then there are vehicle expenses. If you think more than 25% of your travel is for business you need to back this up with a log book, but, if you travel lees than 5,000km per year you can claim mileage based on your actual travel. You need to keep a record of the distances you travel and what the purpose of the trips were.
Once again, if you are unsure on what you can claim, speak to your accountant to get clarification.
Review fixed assets, stock and debtors.
You should review your list of fixed assets before the balance date. Physically sell any surplus or unused assets that can be sold. Other surplus assets which are obsolete should be written off, along with any assets that have been thrown out or lost.
Review your stock level before balance date for out-of-date or obsolete items. Dispose of any unusable inventory before balance date and record at cost. Also, review your overdue debtors before the end of your financial year and write-off any bad debts by recording them in your software.
Plan your expenditure.
To reduce your taxable income if necessary, purchase any upcoming expenses, like stationary, before 31 March in order to claim them as early as possible. Prepayments such as insurance can be claimed in full, as long as the total prepaid is less than $12,000