Year end – It’s not too early to start planning.
Don’t leave it until the last minute to start planning.
Following are some hints and tips you can put into place to ensure you are as prepared as possible for a stress free year end and a fresh start to every new financial year.
- SOURCE DOCUMENTS – Keep source documents in a tidy organised manner. If you’re still using a paper system, ensure everything is filed in a way in which you can quickly and easily locate it should your accountant or auditor request it. Some cloud accounting products will even allow you to upload receipts/invoices to transactions these days which can save the hassle of paper filing, save you trying to read those old faded paper receipts, or save the time and hassle trying to locate those loan documents for your accountant. Also ensure you have all of your bank statements, bank reconciliation reports and loan statements. Your accountant will generally want to see them for general ledger reconciliations.
- COMPILE A COMPREHENSIVE DATABASE ALL YEAR ROUND – When entering customer, supplier and employee information into your accounting package, ensure you add ALL details so that you have a neat and tidy database. Spend the time and do the job correctly the first time. Ensure you have added and checked contractors and suppliers ABN’s are valid as this is your responsibility. You can do a simple search of ABN’s at ABN Lookup.
- CHECK ACCURACY OF SOURCE DOCUMENTS ALL YEAR ROUND – Ensure you receive valid tax invoices from your suppliers. You need these documents to be able to make valid claims for GST and taxation purposes. More information on valid tax invoices can be found at the Australian Taxation Office.
- CHECK DEBTOR AND CREDITOR BALANCES – Check creditor and debtor balances prior to forwarding your files to your accountant. If balances are incorrect it may well be that items need to be written off or adjusted. If you’re not sure as to how to do this properly, talk to your bookkeeper.
- RECONCILE YOUR GENERAL LEDGER – Generate a general ledger report and peruse all the accounts and transactions. Check that items are coded to the correct accounts with the correct tax codes. Other things to look out for include; coding private components of expenses, the quantity of loan payments you’ve made and ensure that all interest expenses have been recorded. Once again if you’re unsure of how to do these things, talk to your bookkeeper.
- REVIEW YOUR BALANCE SHEET ACCOUNTS – Review your balance sheet regularly. Do the asset balances match your assets? Do your liability balances match what you actually owe? In particular, does your tax payable match your integrated client balance with the Australian Taxation Office? If not, perhaps seek assistance from your bookkeeper or accountant to analyse why.
- FINISH OFF THE PREVIOUS YEAR PROPERLY – Ensure you request closing journals from your accountant after your taxation has been prepared. These closing journals will ensure that your financials match what is lodged with the Australian Taxation Office and will include things like depreciation expenses. In many cases this isn’t done therefore balance sheet accounts will show incorrect balances. This isn’t a good thing if you wish to use your own financial reports for applying to financial institutions for loans etc.
- LODGE EARLY – Get your file to your accountant early. Why leave it to the last minute, risk being late and then face late lodgement penalties? At the end of the day your liability for tax will not be payable early if you lodge early, it will still be due on the due date. Alternatively, if you’re due for a refund, the cash is better back in your bank account earning interest.
- START PLANNING NOW – Talk to your accountant NOW to start taxation planning for the current financial year. Starting early allows time to implement strategies.
