To make things nice and easy, we've put together a tax return checklist that you can go through at the EOFY, plus some pointers to make life easier next time.
Ensure you have all the right paperwork
There’s some important paperwork you’ll need to get together at the end of every financial year.
This isn’t absolutely everything, but to help get you thinking, here are some important ones:
- A profit and loss statement (P&L), which is a summary of income and expenses for the year;
- Supporting documentation for your P&L, such as invoices or receipts of customer sales and business expenses;
- Records of your expenditure on business assets, which can be used to help calculate deductions, depreciation and capital gains tax;
- Records of payments to employees, including super contributions;
- Inventory and stock records, if applicable;
- Bank statements;
- Business Activity Statements (BAS) or monthly Income Activity Statements (IAS), if applicable.
Having all of this information together before you start your tax return will mean less running around while you’re getting it done. If you’re getting your tax return done for you by a tax accountant, it could save you time if you have everything in one place to start.
If you’re a sole trader, separate your personal and business finance
If you’re a sole trader, it can be tricky to keep your work and personal life separate. For many people, their small business is their baby — it’s taken a lot of hard work and care to grow it to where it is, so it’s easy to think of it as a part of oneself. When you’re doing your tax preparation, the ATO needs you to think of your business as its own thing, separated from your own personal taxes.
If your small business is not incorporated, you’ll have to take extra care to keep the business’ finances separate from your own. That means keeping your receipts for personal expenses (like groceries or school uniforms) away from your receipts for business expenses (like fuel for your work car or shiny new tools).
One simple trick is to establish a business account for work which you never use for personal stuff. This should simplify the head scratching work of sorting through your credit card statements and make tax preparation much easier in the future.
Link your accounts to digital bookkeeping service tools
In the past, keeping your books up to date was a manual process. These days, you can link your business accounts to digital accounting software to streamline the whole process. If required, you can also have a separate account for GST purposes. If you’re a business member with us, your transaction data can be automatically transferred to two popular software services: Xero and MYOB.
This means that you, plus anyone else in your business with access, and your accountant (if you have one) can all keep track of the financial information you share with them. It also means more reliable, accurate and secure data transfer, since there are no emails being flung around with out-of-date spreadsheets attached. Even if you don’t have a dedicated accountant, this software can help you do your own basic accounting and tax preparation, long before the EOFY.
When in doubt, speak to an accountant or other tax professional
Depending on your business’ structure, cash flow, plus your level of experience with finance; doing your own basic accounting can be relatively simple. It’s easier than ever to use digital accounting software and lodge your own tax return online.
However, for a number of businesses, it makes sense to speak to a tax advisor, Certified Public Accountant (CPA) or other registered tax practitioner. They can help you with a range of tax services beyond your tax returns, including: advising on tax laws, helping with cash flow management, and handling payroll.