With the financial year end approaching, your focus as business owner will have to be divided into two things: to keep the business running as usual, and preparing all documentations for tax time. EOFY accounting requires a lot of paperwork, below is overall checklist for EOFY accounting;
- Payroll: in simple words, having your payroll documentation ready means you have it checked, reviewed, and updated. By the end of June, all payments for staff and employees should be recorded. As a business owner, you must understand that all employees’ PAYG summaries have to be lodged by July 14; the summary lists all the payments you have made and the amounts you withheld, so the employees can file their own tax returns accordingly.
- Income: knowing your income for the current financial year allows you to see whether your sales have (or have not) met the targets/budget. Balance sheet must be reconciled so you understand your current position in the business. Comparing sales from previous years will help you understand the trends in your business.
- COGS: Cost of Goods Sold, or more commonly referred to as COGS, is the cost attributable to production of goods sold by your business. If you are a manufacturer, this is basically the production cost which may include the cost of materials, labour, and even distribution. In general, COGS is the amount of money you spend to get the product in the first place until you sell it; therefore, it also covers indirect expenses for sales force as well. COGS data appears on income statement for you to calculate gross margin.
- GST (Goods and Services Tax): for most goods and services, GST is at 10%. This regulation applies to most (not all) Australian businesses. If you are small business owner, chances are your company is subject to GST. The rule of thumb is that you need to collect GST from your customers (normally calculated as one-eleventh of actual sale price) and give it to ATO (Australian Taxation Office) every time you lodge BAS. Every business that has GST turnover of at least $75,000 or non-profit organization with at least $150,000 turn over must register for GST.
- Stock or Inventory: assets and investments are considered inventory. Proper inventory check involves physical verification of quantities and conditions of all the assets and investments you have. The main purpose is to have accurate valuation and audit. It allows you to see what you need for the coming year and establish the stock turnover.
While EOFY can be daunting, it is an essential process that every business needs to undergo. It is all necessary to understand your current position in the market, financial strength you have, and make sure that you comply with the law. To better understand the EOFY accounting, contact 360 Accounting services on 1300 360 749 or fill in our Enquiry form.