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End of Financial Year Checklist for Sole Traders (2023 Update)

May 18, 2022 4:34:10 PM

The EOFY (end of the financial year) is an important time for you and your small business as a sole trader. It can be a stressful time of bookkeeping, tax returns and planning for the new financial year.

However, you can take the stress out of tax time and make it work for you with some preparation and planning.

Follow the advice in this guide to ensure a smooth-sailing tax season.

The Key Points:

  • Keep an up-to-date account of your financials.
  • Try to regularly put money aside throughout the year to prepare for tax time and a potentially high tax bill.
  • Find out and list the business expenses you can claim back.
  • Consider how government incentives could help you.
  • Plan ahead - calendarise key tax dates to be aware of deadlines.

EOFY for Sole Traders Checklist
Download the Checklist

EOFY for sole traders

1.   Update Your Paperwork

At EOFY, there’s a lot of paperwork for you to navigate. You need to locate all of it and get it in order to have a clear picture of your financials, meaning you have the precise figures for your balance sheet and profit and loss statement.

A balance sheet outlines your assets (stock, cash, money owed to you) and liabilities (loans, the money you owe) to generate a statement of your financial position for the year.

A P&L (profit and loss statement) tells you how much money your company has made overtime - over a year period, for example. It shows your earnings and expenses. By subtracting your overall income from your total costs, you can determine your profit.

To form these documents, you should make sure you have records of:

  •  Sales receipts
  • All records of invoices or receipts made using funds allocated for the business
  • Payments to employees or contractors (if applicable)
  • GST returns
  • Records related to tax returns, activity statements, and employee super contributions

Having all these documents to hand and organised will make it considerably more manageable for you to build an accurate picture of your business’ finances.

 EOFY finance

2.   Establish What Tax Deductions You Can Claim

Here in Australia, you can claim deductions for all sorts of business expenses for things that you pay for to keep your business running smoothly. However, you need to keep receipts for these purchases to establish a paper trail throughout the financial year.

It's smart business sense to learn about the unique deductions available to your industry and claim what you can within the limits of the law.

Some standard tax deductions for sole traders include:

  • Software used for your business
  • Costs for Marketing
  • Costs for tax accounting
  • Tax paid on business loans
  • Professional memberships
  • Costs for business travel (including if you use a car for business)
  • Depreciation of some types of business equipment like laptops or mobile phones
  • Costs for businesses operated at home

Find out what you may be able to deduct on the Australian Tax Office website.

 What you can't claim

Some expenses are not deductible, such as:

  • Entertainment expenses
  •  Traffic fines
  •  Private or domestic costs, such as childcare fees or clothes for your family
  • Costs relating to earning income that is not assessable, such as money you make from a hobby
  • The GST component of a purchase if you can claim it as a GST credit on your business activity statement.

  EOFY Loans


3.   Assess Your Business Equipment (if you have any)

You may be able to claim deductions on any business equipment that you use for your business's daily operations - you can claim depreciation on the loss of value and general wear and tear.

You can claim depreciation deductions for many different types of assets, including: 

  • Computers and associated software
  • Safety equipment
  • Forklifts and other warehouse equipment
  • Office furniture
Since some of these tools and equipment examples may be fundamental to the running of your business, you can even claim on repairs and insurance costs for this equipment as well as any interest you paid on loans to cover their purchase.

At EOFY, you should take a broader look at your business equipment and consider whether you want to replace or upgrade any of it. Consider this a kind of equipment audit. Eligible vehicles or equipment could provide immediate, helpful tax deductions depending on what you need to buy, improve, or repair.

 That’s because sole traders can benefit from an immediate asset write-off - a significant tax deduction - in the first year the asset is used or installed and ready for use. The Federal Government increased the threshold from $30,000 to $150,000 per asset acquired in its Coronavirus Stimulus Package last year.

 This is subject to various conditions, and there are specific eligibility criteria your business must meet in the first place. Nevertheless, this is worth exploring as a sole trader as you approach EOFY to see if you can benefit from this government offer.

 End of financial year


4.   Keep Up to Date With Changes

Don’t simply assume that because something was in place last year, the same applies this year. The laws surrounding tax deductions can change, while there may be alterations in the concessions available to your business. A competent tax professional can tell you about the latest changes to make sure you follow the law and don’t over or underpay.

 Eofy asset write off

5.   Be Wary of Scams

Another thing to run by a licensed tax professional is any correspondence that seems like a scam.

 Some individuals particularly seek out sole traders vulnerable to misinformation. Relatively common tax scams include those that claim you are eligible for a tax refund but explain that you must pay a fee or administration cost to receive it. On the other end, some scammers send notifications that you have underpaid and must pay the outstanding balance immediately, asking you to supply your credit card information.

 If you suspect any messages are scams, you should contact a local tax professional or the ATO office.

  guide EOFY

6.   Carry Out a Stocktake

If your business buys and sells any stock, we recommend performing an EOFY stocktake. This will allow you to assess where you are with your inventory - evaluating the value of your stock and writing off any lost or damaged goods.

 Although this is not a requirement for tax season, as long as the figure hasn't fluctuated more than $5,000 in the last 12 months, it is still an opportunity to assess your processes and make adjustments going into the next year.

 tax write off

7.   Carry Out Financial Reporting

 Number 1 on this list relates to updating your paperwork, and part of that process is producing a balance statement and a profit and loss document. These should form the basis of your financial reporting.

 Then, use these financial reports to dictate what you will do in the next financial year. Use EOFY as a milestone to make new aims and objectives for the coming year.

 Based on the paperwork and reporting you carry out at EOFY, update your business plan accordingly and measure success against it at the same time next year. This level of organisation will also help you factor tax accommodations into your business and budget accordingly to avoid any unwelcome surprises.

 EOFY business

8.   Secure Your Files

It’s good practice to establish good habits around EOFY. It is self-evident that the process of declaring your taxes is heavily reliant upon thorough record-keeping. Around EOFY, you should digitise all of your records and receipts and file them appropriately on a hard drive. If you have all your files stored on a laptop or computer, back them up regularly to ensure they are safe and secure.

 tax deductions

9.   Calendarise Important Due Dates

You must lodge your tax returns each year. This is a fact of life for any sole trader. However, the date by which you are obligated to submit your details depends on your business structure.

 For sole traders specifically, you can lodge your tax returns at any point from 1 July to 31 October each financial year. While this may seem like a broad period, we advise setting strict deadlines within this time for when you need to have certain things ‘done’. That’s because there is a long, complex checklist for all the things you need to do, so you don’t want this to creep up on you.

 Careful planning and adherence to a schedule will help the whole process go much smoother. In You should also establish deadlines with your tax agent.

EOFY for Sole Traders Checklist
Download the Checklist

EOFY for Sole Traders

 As a sole trader, EOFY can often seem like an intimidating bunch of paperwork that detracts from your already busy daily operations just trying to manage your business.

 However, as we’ve established, taxes come around every year as sure as sunshine, and it pays to be prepared to make the tax process a lot more manageable.

 Over and above the notion of stress avoidance, knowing the law can also help your budget as you may be eligible for a whole host of tax deductions from the government.

 Follow our tips to take the pain out of EOFY and make the whole process work for you and your business.



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