Xero’s top tips on getting your small business EOFY ready
It’s almost the end of the financial year, can you believe it? Time sure does fly when you’ve got your head down working. It’s time to start wrapping things up, and no doubt you want to kick the new year off with a bang. Well, you’ve come to the right place. The Xero team have pooled together all of our resources to create the ultimate EOFY checklist available for download here. Below, we’ve walked you through everything you need to do so you can sleep nice and easy come June 30.
1. Make a plan with your advisor
Is tax time stress getting you down? We highly recommend working with an advisor to alleviate the pressure and take the pain out of managing the books come year end. 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 year ahead.
2. Get your bills, invoices and paperwork sorted
In the course of a year, a small business can accumulate a decent sized paper trail – even after you’ve moved your accounting to the cloud. Do your future self a favour by following up on the year’s quotes, draft invoices and billable expenses. This way, you can start the new year with a clean slate.
It always pays to plan ahead, so make sure you have the necessary documents ready for your chat with your advisor. They’ll be able to tell you what records they need, but if in doubt, simply check the ATO’s EOFY essential tasks.
3. Ditch the paper trail
It’s time to go digital. Moving forward, consider making the transition to paperless options like Xero Files and Email to Bills or a document management app from the Xero App Marketplace to help you convert documents like expenses, bills or invoices straight into Xero.
4. Get reconciling
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. The longer things are left unreconciled, the more difficult it can become to match the transactions. So if it wasn’t done this time around, make a habit of reconciling regularly in the new year.
Run the Bank Reconciliation Summary to check if your actual bank balance and the balance of the bank account in Xero match. 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.
5. Clean up your contacts
Your most important business relationships live within your contacts in Xero. Make sure they’re on point by using EOFY as an opportunity to clean your contacts up and start the new year with a clearer picture of your whole network.
6. Clean up your chart of accounts
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 could be archived (like if employees are using two different accounts for the same thing e.g. one titled ‘Motor Vehicle’ and the other titled ‘MV’).
This can help to reduce errors and speed up your processes when creating invoices, bills, expenses and more in Xero.
7. Finalise payroll
If you have employees, you’ll need to complete your year end reporting to the ATO. The introduction of Single Touch Payroll (STP) has changed the way employers report wages, superannuation and PAYG to the ATO.
Luckily, STP is as simple as a few clicks with Xero. We also have comprehensive payroll end of year webinars that detail how to process year end; both for those still needing to produce payment summaries and those who are processing their first STP finalisation.
8. 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.
9. Fix up your fixed assets
Lastly, it’s time to fix up your fixed assets. Work with your advisor to manage the depreciation and disposal of your business assets during the year. You should keep a record of all assets purchased, and have your advisor set up a register to record and depreciate your fixed assets in Xero. The final step? Make sure that any draft assets are dealt with come year end.
Well done for navigating another big year in your small business. By using Xero’s ultimate EOFY checklist (along with the information provided in this very article) and working effectively with your advisor, you’ll be all set you up for a smooth year end. We can’t wait to take the ride with you into the new financial year. And remember, if you’re ever in need of help, Xero Central is your one-stop-shop for all things Xero with free online support available 24/7.
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Source: Xero Blog