EOFY: Remember to Deduct Your Prepaid Expenses

The Cut-Off for Claiming Deductions is Looming

reduce-your-taxable-income-with-expenses-Xero-and-MYOB
Dive deep into your claimable expenses and don’t forget all those smaller prepaid expenses like magazine subscriptions or domain name registrations – you can only claim all of these during the period in which they occurred.

WE’RE IN THE LAST QUARTER of the 2016/17 financial year, so now is the time to dive in deep and check you’ve included every single business expense — prepaid or otherwise — to ensure all your expenses are in order.

We’ve previously posted about writing off stock and inventory and the reports you’ll need to file your activity statements and tax returns: all of these you’ll learn how to run in our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.

Expenses reduce your taxable income

We all know this, but remember, they can only be claimed for the period in which they occurred. If you forget to claim a major business expense in the financial year that it occurred, you can’t make it up by claiming it the next year.

It’s really important you thoroughly check your credit cards and business accounts to make sure you’ve accounted for each expense. The final quarter of the financial year is also a good time to make any purchases for your business, because you can claim them straight away.  

Prepaid expenses are often forgotten

what are some claimable expensesMagazine or journal subscriptions, domain name registrations, business name registrations, car registrations, website fees, insurances — collectively they add up, but they’re also the easiest to forget.

These deductions are often prepaid and may not come up on your radar and may certainly not show up on your final quarter bank statements.

Make a list and check it twice

Over the next month or so, make a list of all of your expenses as you think of them. This makes it easy to spot them when you’re going through your bank and credit card statements and checking them against the expenses in your accounting software.

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Learn how to run the reports you’ll need for EOFY with our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.


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EOFY: Organise Your Reports and Records

We Show You The Reports to Generate Now for End of June

profit and loss statements P&Ls
Now’s time to take stock of the reports that need to be generated to keep you GST and tax compliant.

THE LAST QUARTER OF the 2016/17 financial year is upon us, so now is the time to organise your reports and records; including Profit and Loss Statements, Accounts Receivable and Payable, PAYG and Super payments. We’ve previously written about writing off stock and inventory and getting your business expenses in order. In this post we’ll take a look at the reports and records you’ll need for EOFY, which you’ll learn how to produce in our MYOB BAS Reporting and GST or Xero GST, Reporting and BAS training courses.

Profit and loss statement

Depending on the structure of your business, you may be legally required to include a P&L statement with your tax return or activity statements. Your tax agent will be able to advise you if your business will be required to file a P&L, which  requires all of your bookkeeping to be up-to-date before you can run it.

Even if you don’t have to file one with your activity statements or tax returns, it’s still a good idea to run a P&L for your own sake. A P&L statement identifies whether your business has made a profit or loss and which accounting period these occurred.

Accounts receivable, payable

Find out who owes money to your business and to whom your business owes money. This is obviously part of the credit management process, which any good business will have in place already, but it’s a good idea to keep a steady eye on what’s coming in and what’s going out as EOFY approaches.

PAYG, superannuation

The end of each quarter brings a lot of PAYG and superannuation reporting, but EOFY brings a double whammy of activity statements tax returns and PAYG and superannuation compliance. You’ll need to run these reports so your bookkeeper can complete the payroll component of your returns.

Inventory stocktake

If you sell goods, you’ll need to complete a stocktake of your business’s inventory so that any missing stock can be written off, and to ensure you’re starting a clean slate for the new financial year.

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Learn how to run the reports you’ll need for EOFY with our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.


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EOFY: Get Your Business Expenses In Order

We Show You 2 Steps You Can Take — Right Away!

WE’VE ENTERED QUARTER 4 for the 2016/17 financial year, so we’ve been writing about the things your business should be doing this quarter in preparation for the end of the financial year. In our last post we wrote about writing off stock and inventory. Now we’re looking at business expenses.

Our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course will show take you through the necessary steps in your accounting software. 

Here’s what you can do now to make sure you’re prepared come tax time? Continue reading EOFY: Get Your Business Expenses In Order

End of Financial Year: Writing Off Stock

We show you how to write off stock and inventory before the EOFY

how to write off stock before eofy in xero myob
Do you know how to make inventory adjustments? Our Xero and MYOB BAS and GST Reporting courses can show you how.

IT’S A GOOD TIME TO START  looking at any slow-moving or obsolete stock that your business (or your client’s business) may be holding, as we’ve reached the end of Quarter 3 and have now started Quarter 4 for the 2016/17 financial year — which means the end of the financial year is fast approaching.

Writing off stock in MYOB or Xero is known as making an inventory adjustment, and our MYOB BAS Reporting and GST or Xero GST, Reporting and BAS training courses take you through the steps to do this. But first, you need to identify which items aren’t selling. We’ve created this case study to help you understand how.

Understanding your inventory’s performance

Every business needs to understand how their inventory is performing, and how it impacts their business. If the business owner is too busy to stay on top of this, then they should employ a bookkeeper to help.

A good example of why understanding inventory is important to a business is to look at an air conditioning company. This business makes money two ways:

  1. Selling air conditioning units
  2. Installing / maintaining air conditioning units

The margin on the sale of an air conditioning unit is not much, a few percent on top of the wholesale price. Where the business makes its money is in the installation or maintenance of the units it sells.

The business purchases three dozen units, of varying brands, models, price points, etcetera. It now needs to know which units are most popular with customers and why; which units aren’t popular with customers and why; whether it’s profitable for the business to continue to stock the unpopular units; or, conversely, whether it’s profitable for the business to continue stocking the popular units.

Inventory reporting

The business’s bookkeeper regularly runs a number of reports in their accounting software, including profit and loss reports and stock-on-hand reports. These reports are used to identify which units sell quickly, as well as the units that take longer to sell, and the profit margins on each.

The units that sell quickly don’t require a technician to install them. Although they’re responsible for the majority of sales, they don’t generate more revenue for the business. The units that sell slowly, do generate more revenue as they require installation and maintenance, however too many units were ordered and they’ve now been discontinued by the manufacturer. Some units have hardly sold, and, although not discontinued, have been superseded by newer models.

Stock write offs and future orders

Because the bookkeeper regularly runs these reports, s/he has been able to export them into Excel for further analysis. By the end of Q3, the bookkeeper can make suggestions to the business owner about the future of the business.

In particular, the bookkeeper suggests that the units that have been superseded are marked down to clear as much stock as possible, and cease any new orders. Likewise, the discontinued models will be marked down.

Orders for the units that replaced the discontinued models will halve the order volume. Likewise, order volumes for the top selling units will reduced. The profit margin on these units is very low and they result in no additional revenue from installation or maintenance. The profit that would be earned on the additional units is negligible, however by reducing the unit volumes, the business improves its cash flow.

Act NOW for EOFY

If your business sells stock or a combination of stock and services, like the air conditioning business does above, start looking at your inventory now. Markdown any slow-moving stock at the end of Q3, to give your business time to move the remainder of it. If it doesn’t sell, write it off at EOFY.

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Our MYOB and Xero training courses have recently been updated to include a workbook on how to write off inventory. Learn more about our MYOB BAS Reporting and GST or Xero GST, Reporting and BAS training courses at our website.


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EOFY Tips: Keeping the Accountant Happy

bookkeeper accountant eofy tax preparation list
As a business owner, you don’t need to dread the 30 June!

30 JUNE IS VERY LIKELY a date dreaded by most bookkeepers. If you’re new to bookkeeping, we know it takes a while to remember everything that needs to be done, which is why we’ve been putting together blogs containing EOFY tips and checklists to make sure you make it to August!

And continuing in that tradition, we’ve put together one more checklist to help you out with your end of financial year analysis — some tips on keeping your clients’ accountants happy.

End of Financial Year Checklist to Keep Your Accountant Happy

Once you’ve done all of your EOFY reports, reconciliation and payroll (see our EOFY payroll checklist), you’ll need to forward on a few reports to your clients’ account.

These reports will vary from client-to-client and depend greatly on the size of the company, entity, or what services you’ve been engaged to provide, but typically every accountant will need the following:

  • Reconciliation Reports — BAS GST, payroll and accounts
  • Reports — balance sheets, P&L, general ledger accounts, accounts receivable & accounts payable at 30 June
  • Details of any motor vehicle usage
  • Accounting Information System copy of data file (backup)

For more tips to help you through your end of financial year analysis, see our EOFY checklist or our EOFY payroll checklist posts or visit the Institute of Certified Bookkeepers website.


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Survive 30 June: EOFY Payroll Checklist

checklist
Make it through July with our End of Financial Year Payroll Checklist.

While everyone else is excited by the prospect of receiving a fat tax cheque from Mr Tax Man, if you’re a bookkeeper you’re probably not so much excited as you are busy. If this is your first time looking after the EOFY analysis for your new business (or maybe you’ve just enrolled in our MYOB course and you’re wondering what you’ll be doing this time next year), we’ve put together an EOFY payroll checklist to help you make it through July.

Get Your Details Up to Speed

Before you get started, make sure you check you’ve got the correct details for each of your employees — check you have the correct addresses and TFNs for all staff.

Also check that employees who have been terminated have a termination date and check the annual leave entitlement flag has “carry remaining entitlement” in MYOB.

Now we can begin!

  1. Reconciliations: reconcile total gross wages payment register, outstanding PAYGW liability, super liability and payroll tax for the year — see the Institute of Certified Bookkeepers payroll tax resource on the ICB website
  2. Print Reports: print payment register summary and payroll entitlement balance sumarry/detail
  3. Reconcile PAYG Withholding: see Insitute of Certified Bookkeepers payroll checklist resource
  4. Prepare Payment Summaries: remember salary sacrifice and ensure you send magnetic media form and EMPDUPE file to the ATO by 14 August
  5. Rollover Payroll Year: backup payroll file and store in payroll folder, rollover year to the next payroll year and load new tax tables
  6. Superannuation: don’t forget that the superannuation guarantee increased to 9.25% from July 1 2013.

For more tips to help you through EOFY analysis, see our EOFY checklist or visit the Institute of Certified Bookkeepers website. Happy EOFY!

What You Need to Do Before 30 June!

Print out our checklist of what you need to complete before the end of financial year.
Print out our checklist of what you need to complete before the end of financial year.

If you have recently started your own business after completing our online MYOB training course, and this is your first time doing end of financial year (EOFY) analysis, never fear — here’s an EOFY checklist to make sure you’re ready!

Even if you’re a veteran bookkeeper, these are still handy tips that are often overlooked in the rush to get everything ready by 30 June.

Before the EOFY:

  1. Make sure you present and clear any old cheques before 30 June before you reconcile your bank accounts — you don’t want to leave these until the following financial year, as it create problems later on down the line.
  2. Also chase-up any outstanding debtors (people who haven’t paid an invoice that’s overdue) as, again, if it’s paid after 30 June, this can create problems later on.
  3. If you have any outstanding debtors that are more than 12 months old, cut your losses (so to speak) and claim back the GST.
  4. You should also write off any old stock if it is also more than 12 months old.
  5. Once this is done, reconcile your accounts — is your un-deposited funds account bank to nil? If not, you need to go back and investigate why.

Now for Payroll:

  1. Don’t forget that the superannuation guarantee will increase to 9.25% from the 1st July this year — make sure you update your records so you don’t get caught out later on down the track.
  2. Make sure you have all of your employees’ tax file numbers before 30 June.
  3. Pay your June Superannuation Guarantee Charge (SGC) by 30 June this year to ensure you actually get the tax deduction this year.
  4. Also make sure you pay all your SGC obligations before 28 July 2013 to avoid SGC review and all the time-consuming paperwork that goes with it.
  5. Don’t leave your payment summaries until the last minute — by law you have to provide these to your staff by 14 July, so you give yourself plenty of time.

 

Remember: In MYOB the software requires you to enter a tax file number for all employees regardless of whether they have one or whether you have to print a payment summary for them or not.

In this instance use the following codes:

  • For a New Payee that has not made a TFN Declaration, but 28 days have not passed use: 111 111 111
  • Payee is under 18 years of age and earnings do not exceed $350 per week, $700 per fortnight or $1,517 per month use: 333 333 333
  • Payee is an Australian Government pensioner payee use: 444 444 444
  • Payee chooses not to quote a TFN and has not claimed an exemption from quoting a TFN or does not fit into any of the above categories use: 000 000 000.

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And while we’re dispensing handy tips, we find that if you have a checklist of all the things you must do for as part of your end of financial year analysis, you’re less likely to forget anything. So why not print out this list and keep it by your desk so you don’t get caught out.