Wrapping Up 2021
Another financial year has been & gone. For some businesses it will have been the most challenging in years. Many will have been impacted by Covid-19 shutdowns and struggled to keep their businesses operating and viable.
The new financial year may bring renewed hope and opportunities, but attention still needs to be given to the 2021 end of financial year accounting process. With a raft of Government Stimulus measures enacted, this process may indeed be more complex and time-consuming than in previous years.
So what do you, as a business owner, need to focus on this tax time? In this blog we’ve put together a list of things needing your attention and provided links to checklists and guides we’re certain you’ll find useful as you transition from one financial year to the next.
Record Keeping
All taxpayers have a legal obligation to maintain adequate records explaining how income and expenses are calculated and to hold supporting documentation in relation to those transactions. Australian taxation legislation also asks you to make choices and/or elections in relation to various matters – you must maintain appropriate documentation to support any choices or elections you have made.
This applies regardless of your operating structure – whether you conduct your business as a sole trader, as a partnership, trust or company.
Now is the perfect time to review your business record keeping practices to ensure you are meeting Australian Taxation Office (ATO) requirements. Remember, changes may have impacted your business during the last financial year (e.g. JobKeeper) and it is essential your record keeping and end of year financial statements comply with the most recent developments.
If you have implemented automated record keeping systems, it is more likely ATO requirements are an inbuilt feature of whatever software you are using, provided you are using the most recent version of that software.
If you’re still using manual processing systems, or perhaps old software you may find your business is failing to meet its record keeping obligations.
This may come at a huge cost so it would be prudent to thoroughly review your accounting procedures now and transition to a reputable automated system.
A reminder that generally you should keep all taxation records for a minimum period of five years, though some areas require longer periods. The Australian Securities & Investments Commission (ASIC) requires companies to keep records for seven years. Similarly, if you have employees, time and wage records must be kept for seven years (Fairwork Ombudsman).
We offer a range of affordable bookkeeping, accounting & taxation services. See our packages to find one most suited to your business structure. Alternatively, we can design one specifically for your needs.
Income & Deductions
What information do you need to provide your accountant? Providing accurate and complete information will assist the year end process and help to avoid costly mistakes.
Before forwarding your records to your accountant or tax advisor, take the time to make sure all appropriate accounts are reconciled, or provide detailed explanations where things just don’t balance.
If you’re unsure what is required, or how to go about reconciliations perhaps engage a bookkeeper to undertake this on your behalf – bookkeeping fees are generally considerably less than accounting fees. Take some time to decide on the right bookkeeper for your business – the cheapest may not be the right fit for you.
The Small Business Development Corporation has published a FREE End of Financial Year checklist that highlights the documents & information you’ll need. The checklist is easy to read and essential for those fairly new to business, and a great time-saving resource for those who have been in business for a number of years.
https://www.smallbusiness.wa.gov.au/sites/default/files/2021-end-of-financial-year-checklist.pdf
https://www.smallbusiness.wa.gov.au/blog/end-financial-year-checklist
In addition, the ATO have also published the 2021 Tax Time Toolkit – Small Business. This too is a great resource directed at the Small Business sector. The Toolkit provides useful links, calculators and Fact Sheets.
https://www.ato.gov.au/uploadedFiles/Content/MEI/Downloads/TaxTimeToolkit_small-business.pdf
Tax Time Scams
Every tax season sees a range of scams emerge.
Businesses are vulnerable to tax time scams too.
Particularly now, when some or all of your workforce may be working from home at least some of the time, make sure your business has adequate safeguards in place to guard against phishing emails, online and telephone scams.
It is important your team understand and adopt those safeguards.
The link provides information on the latest scam alerts identified by the ATO.
https://www.ato.gov.au/General/Online-services/Identity-security/Scam-alerts/
Consider Automating Your Processes
We’ve already touched on how automation can improve the accuracy of your business record keeping. However, there are some other advantages to be derived from automating processes – reduced costs, improved efficiencies, improved customer experience and the advantages of having ‘real time’ financial information at your fingertips. This is essential for monitoring cashflow, your business’ performance and true financial position.
Cloud based tools can be particularly helpful in keeping you up to date and on top of your compliance requirements.
As you move into a new financial year, consider how your business may benefit by automating at least some key processes.
Of course all systems and networks are vulnerable to cyber-attacks that interrupt normal business processes and operations.
Maintaining an adequate level of cybersecurity is imperative to help mitigate and defend against such attacks.
The Australian Government provides some useful information and guidance to assist businesses in implementing strategies to prevent and respond to cyber-attacks.
A comprehensive Small Business Cyber Security Guide is available which is designed specifically for the Small Business Sector.
https://www.cyber.gov.au/acsc/small-and-medium-businesses
https://www.cyber.gov.au/acsc/small-and-medium-businesses/acsc-small-business-guide
https://www.cyber.gov.au/acsc/large-organisations-and-infrastructure
Wrapping Up
Moving from one financial year to the next is one of the busiest times of the year for all businesses. In these difficult and still uncertain times, it is more important than ever that you take the time to make sure you’re aware of the basics required and to critically analyse your business’s performance and long-term viability. If you have doubts about sustainability, seek guidance from your accountant or trusted advisor sooner rather than later in order to mitigate the risk.
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Important Information:
This blog does not constitute tax advice but is provided for general informational purposes only and should not be relied upon as accounting and/or taxation advice. You should seek appropriate advice from your accountant and/or taxation advisor before making any decision or taking any action in relation to your tax compliance needs.
Whilst every attempt has been made to ensure the information contained within this guide is accurate at the time of preparation, Integrity Impressions is not responsible for any inaccuracies or omissions that may occur as a result of changing laws, rules and regulations.
