7 tips for a smoother tax return at the end of the financial year.
Checklist for tradies
The end of the financial year (EOFY) brings a heap of essential paperwork for tax time, which nobody enjoys doing. But to make the process much smoother and ensure you’re paying what you must, as well as claiming everything you’re entitled to in the 2023-24 tax year, take a look at our EOFY checklist for tradies.
1. Schedule a meeting with your accountant
EOFY heralds a whole host of financial processes for a business to complete. If you have employees and/or pay GST, there are likely to be obligations such as completing a business activity statement (BAS), doing PAYG instalments, reconciling your payroll and paying super for your employees and independent contractors.
Lodging all your business activity statements before you lodge your tax return will also help with reconciling your figures. Run through all your business requirements with your accountant to make sure you’ve covered all the paperwork and payments for the financial year to avoid potential costly penalties. Bear in mind though that as an employer, even if you engage a tax professional, you’re the one who’s responsible for getting it right. Also ask what’s coming up for 2024-25 – such as the super guarantee rate change to 11.5 per cent from July 1, 2024 – so that you’re across it and can budget for it from the start.
2. Reconcile your financials
Of course, you’d be keeping an eye on your business finances throughout the year, but EOFY is a great time to take a snapshot of where they stand. Aim to reconcile your accounts, taking note of outstanding invoices to pay and be paid. If there’s a longstanding sum owing to you from a client, you might want to consider the chances of it actually being paid – if it’s looking doubtful, and you have evidence that you’ve chased the outstanding invoice without success, you may be able to write it off as a bad debt and claim a tax deduction accordingly. Check with your accountant.
3. Tackle your expenses
Gather evidence of the purchases you have made for work over the year. Remember, you can use your PowerPass account to keep track of your receipts across the year, which makes tax time easier. When you scan your card at the Trade Desk (or ‘Check Out’ in the app), the receipt will automatically be saved into your eReceipts in the PowerPass app.
Even a number of small sums can add up to a surprising amount that you may be able to claim as a tax deduction. Remember, if the expense was for both work and private purposes, you can only claim a deduction for the work-related portion of the expense. If you’ve been used to the shoebox style of filing system, you could make 2023-24 your last year for haphazard record-keeping and adopt a new digital approach. The ATO’s myDeductions tool in the ATO app lets you record work-related expenses as you spend, so at the next EOFY, you can simply upload the collected data to send to your accountant or tax professional.
4. Do a stocktake
If you carry inventory, a stocktake will let you know exactly what you have; as it’s considered an asset for tax purposes, you’ll need to declare the value. Check stock for any defects in case you need to write anything off; obsolete inventory can be claimable as a tax deduction so it’s a task that could help reduce your tax liability. Some cloud-based business software, such as
MYOB, includes inventory management, which could be worth exploring to make the process easier for the next fiscal year.
5. Check your kit
Look over your essential tools for wear and tear, and schedule repairs or replacements as necessary. EOFY also often means retail bargains and special offers, so if your cash flow and your business’s profitability allow for it, you could consider making some purchases that are genuinely essential for your business. These could help reduce your tax liability, but bear in mind they are accounted for in different ways depending on the price of the item and your firm’s eligibility.
6. Take care of your super
You’ve sorted out your employees’ end of year payslips and super… but what about yours? Sole traders are not obliged to pay into a super fund, but it makes sense to put regular sums aside for your retirement – plus there can be tax benefits that come with paying into super. Another question for your accountant!
7. Plan for the years ahead
Your EOFY checklist should also include using this time to look to your business’s future. Do you need to adjust your pricing? A forensic look at your financials will help you decide. Should you upskill yourself and/or your workers? It could help broaden your business horizons. Can you make some changes to make the working day run more easily? Adopting project-management software could help with juggling multiple jobs and communication with clients; while bringing in digital business tools such as Xero could assist with budgeting and quoting, helping smooth the path of essential paperwork.
Instead of dreading EOFY, you can use it as a great opportunity to take your business onwards and upwards.
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