Key Takeaways
- EOFY is an opportunity to review both tax compliance and overall business performance.
- Businesses should make sure their bookkeeping and financial records are complete and accurate.
- Review income, expenses, accounts receivable and accounts payable before finalising the financial year.
- Check that business assets and any relevant improvements have been properly recorded.
- Review potential tax deductions and concessions, but only claim amounts the business is entitled to claim and can substantiate.
- Businesses with stock should complete an appropriate stocktake around the end of the financial year.
- Employers should check their payroll, Single Touch Payroll and superannuation obligations.
- Review GST, BAS, PAYG, FBT and other obligations that apply to the business.
- Make sure outstanding tax and other financial obligations are included in cash flow planning.
- Use EOFY results to set realistic financial, cash flow and profitability goals for the new financial year.
Main Text Content
EOFY is more than filing a tax return
For many business owners, the end of the financial year can feel like a deadline for handing everything over to their accountant.
But EOFY can be much more valuable than that.
It is a natural point to stop, review the numbers and understand what actually happened during the financial year.
Did revenue increase?
Did profit improve?
Which expenses grew?
Are customers taking longer to pay?
Are there unpaid invoices that need attention?
Is the business generating enough cash?
Are there unnecessary costs that could be reduced?
The Australian Government’s EOFY checklist recommends businesses use the period to prepare their records, complete tax and compliance tasks and review their performance and plans for the new financial year.
This makes EOFY an important financial management exercise, not just an administrative one.
Start by getting your bookkeeping up to date
Before reviewing tax, make sure the underlying financial records are accurate.
If transactions are missing, incorrectly categorised or unreconciled, the financial reports generated from those records may not give an accurate picture of the business.
Start by reviewing:
- Business bank accounts
- Credit cards
- Payment platforms
- Sales
- Purchases
- Expenses
- Payroll
- Loans
- Asset purchases
- GST transactions
- Owner transactions
Bank accounts and payment systems should be reconciled so that the accounting records match actual transactions.
The ATO specifically advises businesses to keep accurate records of cash and electronic transactions and regularly reconcile cash and EFTPOS sales. It also warns businesses against using estimates when preparing tax returns and BAS statements.
The cleaner the books are, the easier it becomes to prepare accurate financial statements and tax returns.
Review your profit and loss statement
Your profit and loss statement can tell you much more than how much tax you might owe.
It shows how the business performed during the financial year.
Look at:
Revenue
Did sales increase or decrease compared with the previous year?
Gross profit
Are you keeping enough of each sales dollar after direct costs?
Operating expenses
Which expenses increased significantly?
Net profit
Is the business generating enough profit for the effort, risk and capital involved?
Profit margins
Are margins improving or declining?
A business can increase revenue while becoming less profitable.
For example, sales might increase by 15%, but if wages, rent, supplier costs and other expenses increase faster than revenue, the business could end the year with less profit.
EOFY provides an opportunity to identify this before moving into another financial year.
Review who owes the business money
Accounts receivable should also be reviewed before EOFY.
Look at outstanding customer invoices and identify:
- Current invoices
- Overdue invoices
- Long-outstanding debts
- Customers with repeated late payments
- Debts that may no longer be recoverable
The Australian Government recommends reviewing debtors and creditors as part of EOFY preparation.
Unpaid invoices can create a misleading picture of business performance.
A business may appear profitable on paper while having insufficient cash in the bank because customers have not paid.
Following up overdue invoices before the end of the financial year can therefore improve both cash flow management and financial visibility.
Review what the business owes
Accounts payable should be reviewed alongside accounts receivable.
Identify outstanding:
- Supplier invoices
- Contractor bills
- Loans
- Credit cards
- Tax liabilities
- Employee-related obligations
- Other business expenses
Understanding what the business owes helps provide a clearer picture of its financial position.
It can also help the business prepare for upcoming payments rather than discovering several large obligations at the same time.
Check your business assets
EOFY is also a good time to review the assets owned by the business.
This could include:
- Vehicles
- Computers
- Machinery
- Furniture
- Equipment
- Technology
- Business premises
- Other capital assets
Businesses should keep records of assets purchased or sold during the financial year and relevant spending on improvements because this information may be required when calculating depreciation of deductions or capital gains tax.
Reviewing the asset register can also reveal assets that are no longer being used.
If equipment has been sold, disposed of or become obsolete, accounting and tax treatment may need to be considered.
Review your tax deductions
EOFY is an appropriate time to review business expenses and determine which deductions may apply.
Business expenses generally need to meet the relevant tax requirements and be supported by appropriate records.
Business.gov.au advises businesses to check which costs they can claim and to keep records supporting their claims.
This does not mean businesses should try to claim every possible expense.
The objective is to claim legitimate deductions accurately and avoid claims that cannot be supported.
Common areas businesses may review include:
- Office expenses
- Software and subscriptions
- Advertising and marketing
- Professional fees
- Travel
- Motor vehicle expenses
- Equipment
- Insurance
- Business premises
- Interest and finance costs
- Employee-related expenses
- Home-based business expenses where applicable
The tax treatment can differ depending on the expense and the circumstances, so businesses should obtain advice where they are uncertain.
Don’t forget mixed-use expenses
Some expenses may have both business and private components.
For example, a business owner may use a vehicle, phone, computer, or home office for both business and personal purposes.
The private component generally needs to be separated from the business component when determining the relevant deduction.
The ATO specifically advises businesses to work out and accurately record the business portion of expenses that are used for both business and private purposes.
Good records throughout the year make this much easier.
Review bad debts and obsolete assets
EOFY can also be a useful time to identify debts that may no longer be recoverable and assets that are obsolete.
The Australian Government’s EOFY checklist specifically identifies bad debts and obsolete assets as areas businesses may need to consider before 30 June when determining whether a deduction is available.
However, businesses should not simply write something off because they want to reduce taxable income.
The relevant tax requirements need to be satisfied, and appropriate documentation should be maintained.
This is an area where professional advice can be particularly useful.
Complete your stocktake
Businesses that hold trading stock should review their inventory around the end of the financial year.
A stocktake can help determine:
- What stock is on hand
- Whether records match physical inventory
- Whether stock has been lost or damaged
- Whether some stock is obsolete
- Whether inventory records are accurate
Business.gov.au recommends completing a stocktake as close as possible to the end of the income year where applicable.
An accurate stock figure can be important for both financial reporting and tax purposes.
Review GST and BAS records
Businesses registered for GST should also make sure their GST records are accurate.
Review whether:
- Sales have been correctly recorded
- GST has been correctly reported
- Eligible GST credits have been captured
- BAS lodgements have been reconciled
- Adjustments have been properly recorded
EOFY is an opportunity to identify discrepancies between accounting records, bank transactions, and previously lodged BAS statements.
If an error is identified, the appropriate correction process will depend on the circumstances.
Check PAYG obligations
Businesses may also have PAYG obligations.
This can include PAYG withholding for employees and PAYG instalments for business owners or other taxpayers, depending on their circumstances.
Business owners should review their records and make sure relevant amounts have been reported and paid correctly.
A tax liability that comes as a surprise after EOFY can create a cash flow problem, particularly when several obligations become payable around the same period.
Review payroll and Single Touch Payroll
Employers have additional EOFY responsibilities.
Single Touch Payroll information needs to be finalised correctly, so employees receive accurate information for their own tax returns.
For the 2025–26 financial year, business.gov.au states that employers generally needed to finalise their STP data by 14 July 2026, with different timing applying to certain closely held payees.
Businesses should also review payroll records for the financial year and make sure employee payments have been correctly recorded.
Check superannuation obligations
Superannuation is another important area for employers.
Businesses should check that required superannuation contributions have been calculated correctly and paid in accordance with their obligations.
The EOFY period is a useful time to identify any outstanding amounts and make sure payroll records and superannuation records agree.
It is particularly important not to treat unpaid super as simply another ordinary business expense.
Superannuation obligations have their own rules and deadlines.
Consider FBT
If a business provides fringe benefits to employees or associates, it may have Fringe Benefits Tax obligations.
Benefits can include certain vehicles, loans, entertainment and other benefits depending on the circumstances.
Businesses should review whether FBT applies, and whether an FBT return or other reporting obligation is required.
The Australian Government’s EOFY checklist identifies FBT as one of the tax obligations businesses may need to complete.
Check contractor reporting obligations
Some businesses engage contractors rather than employees.
Depending on the industry and circumstances, a business may have a Taxable Payments Annual Report obligation.
The Australian Government notes that businesses in certain industries that make payments to contractors may need to lodge a TPAR, generally by 28 August.
This is another reason to maintain accurate contractor records throughout the year.
Understand your business structure
EOFY is also a good time to review whether your business structure remains appropriate.
Your business may operate as a:
- Sole trader
- Partnership
- Company
- Trust
The tax and reporting obligations can differ depending on the structure.
Business growth can also change the suitability of an existing structure.
For example, a business may have grown substantially, added shareholders, taken on employees or started accumulating significant assets.
A structure review does not necessarily mean changing the structure.
It means making sure the current arrangement still makes sense for the business’s circumstances and future plans.
Don’t overlook your tax bill when reviewing cash flow
A business can have a profitable financial year and still experience cash flow pressure.
This can happen because profits and cash are not the same thing.
A business may have money tied up in:
- Unpaid customer invoices
- Inventory
- Equipment
- Loan repayments
- Other working capital requirements
At the same time, tax liabilities may become payable.
Before the new financial year begins, estimate upcoming tax and other obligations and consider whether the business has enough cash available.
If a business expects difficulty paying an ATO liability, it is generally better to address the issue early rather than ignore it.
Use EOFY to review your cash flow
Cash flow should be one of the biggest areas of focus after completing the financial year.
Review:
- Average monthly cash inflows
- Average monthly cash outflows
- Seasonal fluctuations
- Outstanding invoices
- Supplier payment terms
- Loan repayments
- Tax payments
- Payroll costs
- Major planned purchases
A cash flow forecast can help identify periods where the business may need additional working capital.
The Australian Government also recommends reviewing cash flow as part of EOFY planning.
Compare actual results with your goals
EOFY gives business owners the opportunity to compare what actually happened with what they expected at the beginning of the year.
Ask:
- Did we achieve our revenue target?
- Did profit increase?
- Did margins improve?
- Did expenses remain under control?
- Did customer numbers grow?
- Did cash flow improve?
- Did we hire as planned?
- Did we invest in the right areas?
The purpose is not simply to look at whether the business “did well”.
The goal is to understand why the numbers look the way they do.
If revenue increased but profit did not, what changed?
If cash flow improved, what would have contributed to the improvement?
If expenses increased, were those expenses necessary and productive?
These questions can provide useful information for the next financial year.
Review subscriptions and recurring expenses
EOFY is an excellent time to audit recurring costs.
Look at:
- Software subscriptions
- Memberships
- Insurance
- Phone plans
- Internet
- Cloud services
- Advertising platforms
- Professional services
- Storage
- Equipment leases
Small monthly expenses can become significant in annual costs.
If a service is no longer being used or is not producing sufficient value, it may be worth reviewing.
Reducing unnecessary expenses can improve profitability without requiring additional sales.
Review pricing
A new financial year is also an opportunity to review pricing.
Businesses should consider whether current prices still reflect:
- Supplier costs
- Labour
- Rent
- Technology
- Insurance
- Payment processing
- Tax-related costs
- Overheads
- Desired profit margins
If costs have increased but prices have remained unchanged, profitability may gradually deteriorate.
A pricing review can help identify products or services that generate strong margins and those that may need adjustment.
Set financial goals for the new financial year
Once the previous year has been reviewed, set clear goals for the next one.
These could include:
- Revenue targets
- Profit targets
- Cash reserves
- Debt reduction
- Customer acquisition
- Gross margin
- Operating expenses
- Hiring
- Capital investment
The goals should be realistic and measurable.
Instead of simply saying “increase profit”, consider identifying the specific changes required to achieve it.
For example, the business may need to increase average customer value, improve pricing, reduce unnecessary expenses, or improve gross margins.
Build a tax planning strategy
EOFY should also lead to tax planning for the new financial year.
Tax planning is not simply about trying to reduce the tax bill.
It is about understanding how business decisions can affect tax obligations before those decisions are made.
This may involve reviewing:
- Business structure
- Investment decisions
- Asset purchases
- Business expenses
- Cash flow
- Employee arrangements
- Business growth
- Potential capital gains
- Tax concessions
- Timing of income and expenses where appropriate
Tax planning should always be based on the applicable rules and the individual circumstances of the business.
Keep your records organised
Good record keeping should continue after EOFY.
The ATO advises businesses to maintain accurate records and notes that most records generally need to be kept for five years, although some circumstances require longer retention.
Businesses should consider keeping digital copies of important documents and maintaining appropriate backups.
A well-organised system makes future tax preparation easier and reduces the time spent searching for missing information.
Don’t wait until the last minute
One of the easiest ways to make EOFY more stressful is to leave everything until the final few days.
Instead, businesses can work through their EOFY tasks gradually.
Start with bookkeeping.
Then review debtors and creditors.
Check assets and stocks.
Review of deductions.
Confirm payroll and superannuation.
Check GST and other obligations.
Then review the financial results and plan for the year ahead.
This gives business owners more time to identify issues and seek professional advice if something does not look right.
Protect your business from tax scams
Tax time can also bring an increase in scam activity.
Business.gov.au warns that scammers may use phone calls, emails, SMS and social media to impersonate government agencies and attempt to obtain personal information or money.
Business owners should be cautious about unexpected requests for payment or sensitive information.
If something appears suspicious, verify it through an official government channel rather than using contact details supplied in the suspicious message.
How Sunnyside Financial Group Can Help
EOFY is an opportunity to look beyond tax compliance and understand the financial health of your business.
Sunnyside Financial Group can help Australian businesses with accounting, tax planning, cash flow management, financial reporting and broader business advisory.
This can include helping business owners understand their financial results, identify potential tax issues, improving cash flow, and establishing practical financial goals for the year ahead.
The objective is not simply to complete another tax return.
It is to help business owners understand the numbers behind their business and make better informed decisions.
Sunnyside Financial Group can help make Australian tax, EOFY, cash flow and profitability simpler, giving business owners greater clarity as they move into a new financial year.
Final Thoughts
Preparing for EOFY does not need to be a last-minute scramble.
By keeping accurate records, reconciling accounts, reviewing income and expenses, checking tax obligations and understanding the financial results, businesses can approach the end of the financial year with greater confidence.
More importantly, EOFY can provide a valuable starting point for the next chapter of the business.
The numbers from the previous year can show where the business performed well, where it lost money, and where there may be opportunities to improve.
A strong EOFY process therefore does two things: it helps the business meet its obligations, and it helps the business plan what comes next.
General information disclaimer: This article provides general information only and does not constitute tax, accounting, legal or financial advice. Business tax and reporting obligations vary depending on the business structure, industry, and individual circumstances. Businesses should seek advice from a registered tax professional or accountant where appropriate.
