Tips from Sidekick for the New Financial Year

By . Posted in Small Business, Small Business Advice, Solutions.

The new financial year has kicked off with a hiss and a roar and we’re well underway with helping our clients process their end of year accounts.

To make sure this financial year starts smoothly for you, we have a few tips to share. As always, any questions you can get in touch with the Sidekick team here.

Review Your Receivables
Now is the best time of year to review the accuracy of your receivables. We recommend to take a thorough look through your aged receivables to see if any are bad debts, or there are any other inaccuracies.

TIP: To write off a debtor as a bad debts expense, you must determine that there is no reasonable likelihood that the debt will be paid. A clear indication of a bad debt is if a debtor has become bankrupt or has gone into liquidation. In other words, you should only write off a bad debt if you have no hope of receiving the money.

If you use Xero, you can review your Aged Receivables Ledger by clicking “Reports”, then “Aged Receivables”.

If you hold stock, try to set aside some time as soon as you have the time to do a stock-take. It’s in your best interest to do this as soon as you can so you can work with accurate margins and data going forwards.

Donations to an approved charity are deductible, so if you’ve made a charitable donation this year, be sure to let your accountant know.

Fixed Assets
You can claim a deduction on the purchase of fixed assets that cost $500 or less (excl gst). Now is also a good time to look through your fixed assets and ensure all assets are currently in use in the business. You can review your fixed assets in Xero by clicking Reports > All Reports > Depreciation Schedule. A deduction can be made for the book value of assets if they are no longer in use.

Legal Fees
Legal fees of less than $10,000 (excl GST) can be deducted as revenue expenditure. If your total legal fees are over $10,000 (excl GST) they may be recognised as capital expenditure, and therefore not deductible for tax purposes.

Employee Related Provisions
A deduction can be made for employee related provisions (such as holiday pay or long-service leave) as long as they are paid within 63 days of your balance date. For example if you have a standard balance date (31 March), payment needs to have been made by June 2nd for the amount to be deductible.

Be sure to keep reconciling your bank accounts in Xero. Did you know you can reconcile easily on your phone? For a step by step guide click here for Apple and here for Android.


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