Year End Tips

With the end of the financial year fast approaching for most businesses here are a handful of items that should be worked through to make the preparation of annual accounts as smooth as possible:

1)      Bank and Loan Accounts – make sure these reconcile in your accounting system and match the bank statement for the 31st.

2)      Debtors – review your accounts receivable list, are any of these older than 6 months? Are there any that are unlikely to be collected? If so then you can write these off as bad debts prior to 31 March and claim a deduction for these. No worries if a few months down the track the money does come in, you can just reverse the bad debt claim.

3)      Inventory & Work in Progress – review any inventory, consider writing off any obsolete stock, any amounts written off before 31st March are deductible for tax. Set some time aside to review your work in progress balance at year end if you have any large projects.

4)      Fixed Assets – review your fixed assets, are they all still in working condition or do some needing writing off. Likewise, any new assets should be documented and supported – reminder that any capital items purchased over $1,000 will need to be added to your asset schedule.

5)      Property Transactions – collate all documents relating to property transactions to allow these to be processed.

6)      Legal Fees – if you have spent more than $10,000 on legal fees ensure these invoices are available or attached to the transaction in your accounting system.

7)      Shareholder Current Account – how is the balance of your current account looking? Do you have a high retained earnings balance? Review your dividend policy and talk to your accountant about potentially paying out a dividend before the end of the year.

8)      Bonus payments – any staff bonuses paid out within 63 days of balance date are claimable if they relate to the current financial year. Keep track of these and make a note to ensure your accountant knows these have been paid.

Systems like Xero are great at allowing documents to be attached to transactions, and often include a file system for saving documents like Loan Summaries, HP Agreements, or year-end Bank Statements.

Regular contact with your accountant is key to keeping your information clean and tidy and ensuring a smooth year-end process. Please reach out to the Direct Advisory team today if you have any questions or are looking to streamline your year-end process.

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