End of Financial Year Preparation: A Bookkeeper’s Checklist for Small Businesses
As the end of the financial year (EOFY) approaches, small businesses need to ensure their accounting records are accurate, up-to-date, and ready for submission. As seasoned online bookkeepers, we understand the complexities involved in preparing for EOFY, especially when using accounting software like Xero and QuickBooks. This guide is designed to provide you with a comprehensive checklist to navigate the EOFY with ease, ensuring you meet all your financial responsibilities.
EOFY Accounting Preparation
EOFY isn't just about compliance; it’s a critical time for reviewing your financial health and planning for the year ahead. Effective preparation involves several key steps:
Reconciliation: Ensure all bank accounts, credit cards, loans, and petty cash are reconciled up to the last day of the financial year and agree with your bank statements.
Review Accounts Receivable: confirm all outstanding invoices are correct and follow up any long outstanding amounts.
Check Accounts Payable: review the supplier bills making sure they are still owing and accurately recorded.
Stocktake: If your business holds inventory, a physical count should be completed at EOFY to ensure the accounting records match the actual stock levels and make adjustments where necessary.
Asset Register Update: Review and update your fixed asset register. This includes noting any new assets purchased or old assets disposed of during the year.
Review Business Expenses: ensure all expenses have been recorded for the year so your income tax is reduced. It is also a good time to see if there are any expenses that are no longer necessary and can be cancelled (like those recurring charges on cards).
Financial Reports Review: Generate key financial statements such as balance sheets, profit and loss statements, and trial balances. These reports are critical for assessing your business's financial performance and are essential for both internal review and compliance with external reporting requirements.
Payroll Compliance
Payroll compliance is crucial and includes several key tasks:
Payroll Finalisation: ensure all payroll information is verified and correct. This includes employee details such as names, addresses, and tax file numbers, as well as confirming their salaries and wages and PAYG withholding. Then perform the EOFY Finalisation via Single Touch Payroll.
Superannuation: Ensure all superannuation contributions are paid and reported by the due dates.
Payroll Tax: Check for any state-specific payroll tax obligations and ensure they are met.
Business Activity Statement (BAS) and Tax Returns
Prepare all necessary documentation for your BAS and tax returns. This includes finalising all reconciliations and ensuring that GST has been accurately captured and reported throughout the year. If you are wondering do I need to lodge a BAS or you’re looking for an online BAS agent, read our related pages.
EOFY Tips for Small Business Owners
Start Early: Don’t wait until the last minute. Begin your EOFY preparations early to avoid unnecessary stress and ensure all tasks are completed thoroughly.
Use Checklists: Utilise comprehensive checklists like the small business EOFY checklist to keep track of all necessary tasks.
Seek Professional Help: If you’re unsure about any aspect of your EOFY preparation, consult with a professional bookkeeper or accountant.
End of Financial Year Accounting Procedures
To streamline EOFY accounting procedures, consider implementing software solutions like Xero and QuickBooks, which offer built-in tools and reports tailored for end-of-year financial review. These tools can significantly reduce the manual workload and improve accuracy in your financial reporting.
Preparing for the EOFY can be a daunting task for small business owners. However, with the right tools, checklists, and strategies, it can become a manageable and rewarding process. Remember, EOFY isn’t just about closing the books; it’s also an opportunity to analyse your business’s financial health and strategise for the future. Use this time wisely to position your business for success in the upcoming financial year.
By leveraging tools like Xero and QuickBooks and following the comprehensive checklists outlined in this guide, you can ensure a smooth and efficient EOFY process. Whether it’s reconciling accounts, finalising payroll, or preparing tax returns, each step you take now sets the foundation for a prosperous year ahead. Feel free to contact us if you require any help with your EOFY bookkeeping.