In the third of our four-part series, Brian Hoult from MGI takes a look at some helpful ways for small business owners to get their house in order for the end of the financial year.

Next week - How individuals can get the most from their tax return.

Financial house-keeping for small business

ACCOUNTING SOFTWARE

Prepare your financial year end accounts. This way, any problems can be sorted out and you have a ‘clean slate‘ for the next year.

Do not perform a Payroll Year End function until you have ensured that your PAYG payment summaries are correct and printed. Always perform a payroll back-up before you roll over the year.

PAYG PAYMENT SUMMARIES

You need to provide all staff with their PAYG Payment Summaries on or before July 14 2012. This includes any staff that may have left your employment during the year.

The annual PAYG Payment Summary statement for the year ending June 30 2012 needs to be lodged with the tax office on or before August 14 2012. The tax office can impose penalties for the late lodgement of the Summary Statement.

REPORTABLE FRINGE BENEFITS ON PAYG PAYMENT SUMMARIES

In cases where you have provided fringe benefits to your employees in excess of $2000 you need to report the FBT grossed-up amount on their PAYG Payment Summary. This is known as a Reportable Fringe Benefit amount and there is a label included on the PAYG Payment Summary for this purpose.

DO YOU NEED TO DO A STOCKTAKE?

Under the simplified trading stock rules you can chose not to conduct a stocktake for tax purposes if there is a difference of less than $5000 between the opening stock figure and a reasonable estimate of the closing value of stock at the end of the financial year.

If using this option you should record how you determined the value of the stock on hand.

SUPERANNUATION GUARANTEE AND OTHER TAX OBLIGATIONS

The use of contract labour has increased over rent years. Many businesses are failing to give adequate attention to the risk of incorrectly classifying employees as contractors for tax purposes.

What the parties involved decide to call the relationship is irrelevant for superannuation guarantee, payroll tax or Workcover – it is the nature of the relationship that determines any liabilities.

As a general rule, businesses that hire independent contractors are not responsible for PAYG withholding, superannuation guarantee, payroll tax and Workcover obligations.

However, the tax office has a strict position as to who is an employee for tax purposes and this has been upheld in a number of recent court cases to the detriment of the employer involved.

If you are business that does employ contractors you need to have a process in place to ensure the correct classification of these employment arrangements and review these arrangements as time goes by.

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