Tax Returns for Small Businesses: Bookkeeping Tips for a Stress-Free EOFY starts with setting yourself up for success well before the end of the financial year. Keeping good records year round makes it easier to lodge your tax return accurately, claim all your deductions and maximise any tax refund you’re eligible for. Whether you’re a sole trader or operating as a partnership, this guide offers clear steps to manage your bookkeeping, prepare your company tax return or individual tax return and work with a registered tax agent if you choose.
Why EOFY Can Feel Overwhelming
The Australian Taxation Office (ATO) expects you to lodge your tax return by late July, and missing that deadline can lead to stress or late fees. Many small businesses juggle sales, service delivery and reporting all in one. That means receipts pile up, invoices go unrecorded and work related expenses get lost in the shuffle. When you finally get around to reviewing your business income, your taxable income might not match your actual bank balance. This mismatch can delay your refund or even mean you need to pay more tax.
By staying on top of your bookkeeping, you’ll be ready to lodge a tax return or company tax return with confidence. You’ll know exactly what your income year figures are, including employment income, investment income, foreign income or government payments such as those through Services Australia.
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Setting Up a Bookkeeping System You’ll Use
A bookkeeping system needs to be simple enough that you’ll actually use it every week. Cloud-based software with online services lets you lodge online and lodge your tax return easily through the ATO website or via your tax agent. You can link your bank, scan receipts with your phone and see all your invoices, payroll and expense claims in one place.
Choosing Software That Fits
Most people prefer software that automates bank reconciliations, flags unpaid invoices and connects to your super fund and payroll. Look for features like:
Mobile receipt capture to photograph invoices and keep digital receipts
Automatic bank feeds so you can double check transactions daily
Pre filled expense categories for common deductions like car expenses or home office costs
By using software that’s built for small business, you’ll spend less time manually entering data and more time serving clients or growing your next job opportunity.
Structuring Your Chart of Accounts
Your Chart of Accounts should reflect the way you earn money. Common headings include:
Business income and other income
Employment income or partners’ income for a partnership income schedule
Cost of goods sold or investment expenses
Work related expenses and vehicle expenses
Marketing, advertising and office supplies
Depreciation and capital gains adjustments
Keep each account name clear so you can spot trends in your income statement, assess your taxable income and manage your company’s income versus personal income.
Recording All Your Income Promptly
Accurate income tracking is essential for calculating how much you need to pay tax or expect as a tax refund. When you receive payment, record it against the correct invoice or add it to your cash sales tally. For small businesses with irregular income, logging every sale—even a cash sale—stops under-reporting.
Issuing and Following Up on Invoices
Lodge your tax return faster when every invoice is on record by 30 June. Use consistent invoice templates that include your ABN, payment terms and GST details if you’re registered for GST. Send invoices promptly and follow up on overdue amounts at least once a month to keep cash flow steady.
Managing Refunds and Credit Notes
If you issue a credit note or process a refund, link it back to the original invoice so your net sales reflect true turnover. This matters when you prepare your BAS or lodge a tax return online, avoiding overstatement of business income.
Tracking Deductible Expenses
The ATO allows deductions for expenses directly related to earning your income year. Keeping receipts and clear notes makes it easy to claim home office costs, vehicle expenses, tools and equipment depreciation, or super fund contributions.
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Home Office and Work Related Expenses
If you work from home, you can claim a portion of your rent, utilities and internet based on floor space or time worked. Choose the method—fixed rate per hour or actual cost—and stick with it for the whole year. For vehicle expenses, you can use the logbook method or the cents per kilometre method. A logbook over a continuous 12-week period shows the percentage of business use, while the flat rate method covers up to 5,000 business kilometres.
Investment Income and Other Income Sources
Income from dividends, foreign income, government payments or rent must be included in your total income. Keep statements from your bank, share registry or Services Australia so you can lodge a separate tax return for investment income if needed. If you run a business and have passive income, you may need a separate business schedule or partner reports.
Claiming Deductions
Avoid complex tax lingo. Think in practical terms: you can claim anything you paid for in order to run your business or earn rental or investment income. That covers tools, subscriptions, advertising, health funds membership for staff, training and even professional fees if you use a tax agent or accountant.
Regular Reconciliation
Reconciling your bank and credit card accounts monthly helps spot errors, fraud or missing transactions. You don’t want to discover unrecorded payments in late July when you’re about to lodge a tax return.
How to Reconcile Efficiently
Each month, match your software’s list of transactions against your bank statement. Record any unposted receipts or bank fees. For pending credit card charges or uncleared cheques, use a suspense account in your Chart of Accounts. Once they clear, move them to the correct expense or income account.
Keeping an Eye on GST and BAS
If you’re registered for GST, reconciling means you can lodge your Business Activity Statement (BAS) on time and avoid penalties. Confirm all sales and purchases are tagged correctly to claim GST credits and report GST collected.
Preparing Reports for Your Tax Agent
Even if you plan to lodge a tax return online yourself, having reports ready for review speeds up the process. If you work with a registered tax agent, they’ll appreciate clear Profit and Loss statements, balance sheets and aged receivables and payables. These reports form the basis of your company tax return or individual tax return.
Essential EOFY Reports
By late July, you should have:
Profit and Loss Statement covering all business income and expenses
Balance Sheet showing assets, liabilities and equity
General Ledger for detailed transaction review
Aged Receivables and Payables to manage cash flow
Export these as PDFs or share access through your cloud software to avoid emailing large files.
Reviewing Performance Before Lodging
Sit down with your tax agent or accountant to discuss key figures. This review lets you:
Double check you haven’t missed any deductions
Determine if you need to pay tax beyond Pay-As-You-Go (PAYG) instalments
Plan timing of any prepayments for next year’s deductions
With this discussion done before you lodge, you’ll avoid hasty decisions that might leave money on the table.
A Simple End-of-Year Checklist
Use this checklist to ensure you’re fully prepared to lodge online or via paper forms:
Reconcile all bank and credit card accounts.
Confirm BAS lodgements and GST reconciliations.
Verify super fund contributions and payroll records.
Count any stock on hand and adjust inventory values.
Review fixed asset register and calculate depreciation.
Gather digital receipts and attach to expense entries.
Generate and review Profit and Loss and Balance Sheet.
Discuss figures with your registered tax agent or accountant.
Lodge your tax return or company tax return by late July.
Keep a copy of your lodgment receipt and any Non-Lodgment Advice if you don’t need to lodge.
Tick each item off as “Completed” to track your progress and identify any outstanding tasks. With this approach, you’ll breeze through tax time.
Conclusion
By following these straightforward bookkeeping steps, small business owners can make the End of Financial Year (EOFY) less stressful and far more manageable. Whether you decide to prepare your own tax return or work with a professional, keeping good records throughout the year gives you a clear picture of your business income, expenses and what you might need to pay in income tax.
Start by recording all your income—including any new job earnings, investment income or government payments—and make sure your receipts are up to date. Reconcile your accounts regularly and prepare clear, simple reports for your tax agent or the Australian Taxation Office (ATO). If you choose to lodge your own tax return online, you’ll have all the information you need, and if you use a registered tax agent, handing over your organised records makes their job easier.
Taking action early lets you claim every deduction you are eligible for, ensures you pay only the right amount of income tax and helps you receive any refund without unnecessary delays. Ready to take the next step? If you want to try preparing your own tax return and you’re comfortable with the process, start by getting your records in order. If you’re unsure or have more complicated affairs, consider reaching out to ACT Bookkeeping or engaging a registered tax agent for the support that fits your situation.
