Business Tips

4 essential things you may have underestimated for EOFY

The 19/20 financial year tossed up huge challenges for Australian businesses. From fires and floods through to Covid-19, the financial rollercoaster has been real for many.

Wrapping up this financial year with a clean set of books is not just good business. Clean books will launch you into 20/21 with a stronger foundation and allow you to make solid financial decisions as you navigate the still-uncertain economic climate. 

We didn’t want to write you a typical step-by-step for EOFY. Instead, we wanted to arm you with 4 practical insights that many business owners underestimate or might not have even considered. Each point can have a significant impact on your bookkeeping (and financial) success. 

    Many business owners don’t have existing or strong relationships with their professional financial team, which includes BAS agent bookkeepers and accountants. While it’s always a good time to kick-start these relationships, many have seen that trying to build them rapidly during a crisis is a sure-fire way to add a layer of stress into your business equation.

    Your professional financial team will typically consist of a BAS agent bookkeeper and an accountant. These two people work together to keep your business and books in order and make it easy for you to make solid financial decisions or approach grant and loan applications with ease. They often work best if they are independent of each other so you get the best quality outcomes. Your professional team may also include a financial planner or advisor.

    Use this EOFY to connect with your bookkeeper and accountant. A BAS Agent bookkeeper will keep your books compliant and ready to hand to the accountant at the end of the year – to give your business books their best. It’s a time investment that will pay dividends throughout the year and even more so in a time of crisis.
    Most businesses have a POS system and many of those systems integrate a suite of interconnected features to streamline sales, stock processes, customer service, and more. It’s important to check for sales discrepancies between your POS, automatic bank feeds and accounting software.

    Depending on how your POS has been set up and how it feeds into your accounting software, sales duplicates may occur if bookkeeping processes haven’t been adequately adapted to suit the input of POS data. We’ve seen situations where POS systems are automatically creating sales in accounting software, while sales are also being created from the bank feeds. The resulting duplicates mean you could end up paying additional GST and tax when not needed.

    If you find yourself caught up in such a situation, a reputable BAS agent bookkeeper will be able to help you clean up the file and get things running properly. Keep in mind that the earlier you identify and rectify issues, the easier and less costly the cleanup is. So, check those POS sales links and processes this EOFY.
    Single touch payroll has meant changes to the way you finalise payroll for the financial year. It’s important to get your EOFY payroll obligations right as it’s not as automated as it all may seem.

    Firstly, it’s important to note that employee payment summaries (also previously called group certificates) are now known as income statements. These are the statements issued to employees at EOFY to summarise the wages, entitlements and/or benefits they’ve earned during their employment within the financial year.

    Before you issue income statements, you need to make sure that your payroll accounts balance in your accounting software. Just because you’ve run payroll, it doesn’t mean that everything has come out balanced. This is not an automated process and requires payroll reconciliation, and correct categorisation of wages and allowances that must comply with ATO requirements and expectations.

    Once your payroll has been balanced and checked for the financial year, the final data needs to be pushed through to the ATO. Again, this is not an automated process and needs to be actioned through your accounting software. When this process is used, there is no need to issue employees with income statements.

    If you are using Single Touch Payroll (STP), you are required to make a finalisation declaration for each employee once you have completed your final payment for the financial year. Once the ATO receives your business payroll data, each employee will receive their income statement through their MyGov account and they can then proceed with their individual tax returns.

    You will need to submit finalisation declarations by 14 July if you have 20 or more employees, or 31 July if you have 19 employees or less.
    If you’re relying solely on your automated bank feeds to reconcile your accounts, you could be throwing out the balances in your accounting software. Bank feeds aren’t immune to technical glitches and discrepancies could snowball over time, creating headaches down the track. Additionally, if there were errors in entering opening balances, your figures could be off track.

    We’ve worked with a client who had bank feeds showing as reconciled for the past three years. However, when checked against bank statements, the amounts were out by almost $700. This may not seem like a large amount, but the implications can be far greater. The potential for it to worsen significantly grows with each month that it passes by unnoticed.

    Your BAS Agent bookkeeper should periodically ask you for copies of bank statements so they can validate what the bank says with the financial data that’s made its way into your software. They should then be able to pick up on any issues and may ask for previous statements to rectify balances. A BAS Agent bookkeeper will be far more economical to repair such issues than an accountant.

    Get your 30 June bank statements ready for your bookkeeper now to ensure your accounts are reconciled and balanced. It will allow you to start the new financial year on the right foot.

If you’re ready for less stress and more opportunity this financial year, have a chat with our team. We can’t wait to simplify and streamline your accounting processes. It’s what we do best.