Getting tax time out of the too hard basket for the end of the financial year

On top of everything you’ve got to do as a business owner, accounting isn’t always a top priority so it’s easy to just put it into the ‘too hard basket’. With the end of the financial year (EOFY) fast approaching, many small business owners can feel overwhelmed by the prospect of finalising accounts and entering accurate tax returns.

With a little preparation and the help of Xero and other digital tools, business owners can alleviate the burden of EOFY admin and make an easy transition into the new tax year.

Here are Xero’s top tips to getting your small business EOFY-ready: 

1. Let the digital tools do the work for you

Making the transition to paperless options can be daunting, especially if you don’t know exactly where to start. However, investing in digital tools is one of the best ways to streamline admin tasks and alleviate the burden come year end.

Whether you are a sole trader or small business owner, Xero can help you to send personalised invoices and quotes, keep track of cash flow effortlessly with bank reconciliation, and automate manual bookkeeping tasks like entering bills and receipts.

Xero’s app store is also a great place to start leveraging apps for business success. The apps in our ecosystem are not only amazing tools in themselves to boost productivity, but because they share information seamlessly with Xero, the data entry is all done for you. From reporting, time-tracking, CRM, ecommerce, and more, there is an app to give your business some extra muscle no matter your industry. 

2. Make a plan with your advisor

We highly recommend working with an advisor to alleviate the pressure and arrive at year end with clarity and confidence. If you’re not already connected with a Xero Certified advisor, you can find one here.

The first step? Get together and make a plan on how to approach EOFY. This should include a kick off discussion detailing who will take care of what, milestones to keep on top of, and any changes needed for the new financial year ahead. It’s also an opportune time to review your Xero subscription to ensure you are fully utilising features such as payment gateways to collect pay.

3. Keep on top of bank reconciliation

Keep track of cash flow effortlessly with bank reconciliation in Xero. Every transaction that has come into your bank account for the financial year needs to be reconciled so you can get a clear picture of the year in its entirety. 

Xero’s latest predictions feature in bank reconciliation reduces manual data entry by predicting the contact and account code for transactions that cannot be matched to invoices or bills. This new feature will not only save you time, but also reduces the risk of manual error. 

You can learn more about bank reconciliation and your statement balance/Xero balance in Xero Central. If you get stuck on a particular transaction, don’t worry, just use the discuss tab to flag it with your advisor.

4. Review and process payroll

Finalising payroll year end can be overwhelming, which is why we have put together a helpful guide with seven steps to ensure you have a smooth and easy roll over into the new tax year. 

However, if you run into any challenges along the way then check out Xero Central for some helpful articles, such as preparing payroll for the new financial year, or register for our payroll financial year end webinar to be guided through the process. Plus don’t forget that our friendly support team is also available to give you a helping hand.

5. Clean up your chart of accounts and contacts

EOFY is the perfect time to clean up your business’ chart of accounts. Determine which accounts haven’t been used or if there are any duplicates that can be archived. This can help to reduce errors and speed up your processes when creating invoices, bills, expenses and more in Xero.

Likewise, EOFY is a great opportunity to clean up your business contacts to get a clearer picture of your overall network. 

6. Count your stock

Do you buy and sell stock? EOFY is a good time to check your inventory (also known as a stocktake) as adjustments may need to be made by your advisor, which can affect your tax planning. You can learn more about using Xero to manage your inventory here. Or, if your inventory needs are more complicated, consider an inventory solution from Xero’s app marketplace.

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Source: Xero Blog