Type above and press Enter to search. Press Esc to cancel.

Retail

EOFY Checklist: Prepare Your Retail Business for the End of Financial Year

EOFY Checklist: Prepare Your Retail Business for the End of Financial Year

As the end of the financial year (EOFY) approaches, it’s crucial for Australian retailers to take proactive steps to ensure they’re well-prepared for tax time and maintain healthy finances. 

The EOFY may be intimidating, perhaps even anxiety-inducing. But don’t fret; you’re not alone in this process. By following a systematic approach and implementing essential strategies, you can streamline your operations, keep financial records in check, and maximise tax benefits. 

So, where do you start? In order to ensure you’re prepared for tax season, there are nine key steps Australian retailers should take to navigate the EOFY successfully.

  1. Seek professional assistance
  2. Organise your financial records
  3. Reconcile accounts
  4. Inventory management
  5. Review expenses and deductions
  6. Superannuation compliance
  7. Employee obligations
  8. Cash flow management
  9. Plan for the future
Are you a restaurant owner? Check out our dedicated EOFY checklist for restaurants.

1. Seek professional assistance

There’s nothing wrong with asking for help, so when in doubt, speak to a professional who can guide you. When preparing for the EOFY, Australian retailers can seek professional assistance from accountants or tax advisors to ensure compliance and maximise financial outcomes. To make the most of this assistance, retailers should have certain information and documents prepared.

These documents will facilitate a tax professional’s analysis and enable them to provide tailored advice on tax planning, minimising tax liabilities, and optimising financial strategies for the upcoming year.

Remember: Check your tax agent is registered with the Tax Practitioners Board.

2. Organise your financial records

Organising your financial records will help to ensure a smooth and accurate process as you manage EOFY.

Firstly, you should gather all financial records, including profit and loss statements, balance sheets, and cash flow statements, which provide a comprehensive overview of your financial performance throughout the year. Retailers should also have detailed records of income and expenses, including sales data, supplier invoices, and employee payroll records. 

Additionally, retailers should ensure that they have up-to-date records of tax-related information, such as Goods and Services Tax (GST) calculations, tax file numbers (TFNs), and any applicable tax credits or deductions. Having organised and accurate financial information readily 

These documents provide a clear picture of revenue, expenses, and cash flow. Proper categorisation and filing of these records are crucial for easy retrieval and analysis. Utilising accounting software or cloud-based platforms can help streamline record-keeping and facilitate data management. 

3.Reconcile your accounts

Reconciling accounts involves comparing and matching financial transactions and records to ensure accuracy, identify discrepancies, and maintain a clear financial picture.

Bank statements 

To begin the reconciliation process, you should compare your bank statements with internal records of cash receipts and payments. This step helps in identifying any discrepancies and investigating the reasons behind them. By addressing outstanding items and ensuring that all transactions are accurately recorded, you can have confidence in the integrity of your accounts.

Credit cards

Credit card reconciliation is another important aspect. Retailers should carefully review their credit card statements and match them with corresponding receipts and expenses. This allows for the identification of any discrepancies and the reconciliation of records. By conducting a thorough review, retailers can ensure that all credit card transactions have been properly recorded and that your financial statements accurately reflect credit card activities.

Accounts receivable and accounts payable 

Accounts receivable and accounts payable reconciliation are crucial for managing cash flow and maintaining good relationships with customers and suppliers. Retailers should compare outstanding customer invoices with their general ledger to ensure that they align. Similarly, they should review supplier invoices, purchase orders, and payment records to verify accuracy and address any discrepancies with suppliers. By reconciling these accounts, retailers can ensure that their receivables and payables are correctly recorded and take appropriate actions to collect outstanding payments or address errors.

GST

GST reconciliation is also essential for compliance purposes. Retailers should compare their GST records with the relevant activity statements to ensure that the amounts collected and paid align with their financial transactions. This helps in meeting tax obligations and ensuring accurate reporting.

Payroll

Additionally, payroll reconciliation is crucial to verify the accuracy of employee wages, taxes withheld, and superannuation contributions. By comparing payroll records with relevant documentation, retailers can ensure that the amounts withheld from employees’ wages match the records and reconcile any discrepancies. This step is vital for compliance with employment regulations and maintaining accurate payroll records.

Throughout the reconciliation process, retailers should maintain proper documentation and retain records of their findings. This includes supporting documents, explanations for adjustments made, and any correspondence related to discrepancies. Proper documentation not only provides a clear audit trail but also serves as a valuable resource for future reference and analysis.

4. Inventory management

By implementing robust inventory management practices, retailers can optimise stock levels, improve cash flow, and ensure accurate financial reporting.

To begin, retailers should conduct a comprehensive stocktake to assess the quantity and value of their inventory. By having an accurate understanding of your inventory levels, you can make informed decisions regarding purchasing, sales, and promotions.

During the stocktake, it is important to identify any damaged, expired, or obsolete items. These should be separated and appropriately accounted for to avoid inflating the value of the inventory. Disposing of or discounting such items can help free up valuable storage space and improve overall profitability.

You should also review your sales trends and analyse historical data to identify slow-moving or non-performing items. By identifying these items, retailers can develop strategies to clear excess stock, such as offering promotions or bundling them with popular items.

Utilising inventory management software or systems can greatly aid retailers in efficiently managing their inventory. These systems can help automate processes, track stock movement, and generate reports on key metrics such as turnover, gross margin, and stock ageing. Retailers can leverage this data to make data-driven decisions and ensure optimal stock levels.

Collaboration with suppliers and implementing just-in-time inventory practices can also be beneficial. By working closely with suppliers and having clear communication regarding delivery schedules and lead times, retailers can reduce excess inventory and minimise holding costs.

Lastly, retailers should regularly review their pricing strategies and consider conducting a pricing analysis.

5. Review your expenses and deductions

By carefully examining expenses and deductions, retailers can identify opportunities to reduce tax liability and optimise their financial position.

You should start by thoroughly reviewing your expense records, including operating costs, purchases, utilities, rent, and employee-related expenses. This involves examining invoices, receipts, and financial statements to ensure that all expenses are accurately recorded. It is essential to categorise expenses properly to align with tax regulations and maximise eligible deductions.

During the review process, retailers should pay special attention to any expenses that may qualify for specific tax deductions. This includes deductions for research and development, depreciation of assets, repairs and maintenance, professional services, and any eligible business-related travel expenses. 

6. Maintaining superannuation compliance

Managing superannuation compliance is crucial as you prepare for the EOFY. You need to ensure you have met your superannuation obligations by reviewing and reconciling superannuation records. This involves verifying that superannuation contributions for employees are accurate, complete, and made on time.

Cross-check superannuation payments with employee records to ensure compliance with superannuation guarantee requirements. It is important to rectify any discrepancies or outstanding payments promptly to avoid penalties. Seeking professional advice or utilising payroll software can assist in managing superannuation compliance effectively and ensuring all obligations are met before the EOFY.

7. Consider your employee obligations

It’s important to ensure compliance with tax and superannuation requirements by reviewing and reconciling payroll records. This includes verifying accurate reporting of wages, salaries, and employee allowances. Retailers must also ensure that all superannuation contributions have been correctly calculated and paid on time.

Additionally, you need to review and reconcile leave balances, including annual leave, sick leave, and long service leave. Compliance with employment contracts, awards, and workplace agreements is crucial to address any outstanding employee entitlements or adjustments. 

By fulfilling these employee obligations, you can ensure compliance with regulations, maintain good employee relationships, and facilitate accurate financial reporting.

8. Cash flow management

There are several key factors you need to carefully consider to effectively manage your cash flow. Firstly, you need to evaluate your inventory levels and assess which products are slow-moving or obsolete. By identifying and liquidating excess inventory through sales or promotions, retailers can free up cash and make room for new stock.

Secondly, it is crucial to review outstanding accounts receivable and implement a robust collection process to ensure timely payment from customers. Effective credit control measures, such as offering incentives for early payment or enforcing stricter credit terms, can help improve cash flow. 

Additionally, you should consider negotiating favourable payment terms with suppliers to optimise your own cash position. You can aim to extend payment terms or explore bulk-purchasing discounts, which can provide some relief in managing expenses and maintaining a healthy cash flow. 

Lastly, it is vital to accurately forecast and plan for expenses related to tax obligations, employee entitlements, and other financial commitments associated with EOFY.

9. Planning for the future

As you prepare for the EOFY, take the opportunity to plan for the future based on your past performance.

Firstly, carefully analyse your financial statements and key performance indicators from the previous year. This analysis will provide insights into revenue trends, profitability, and expense patterns. Retailers can identify areas of growth and areas that need improvement. By understanding your past performance, you can set realistic goals and develop strategic plans for the next financial year. 

Secondly, retailers should assess market trends, consumer behaviour, and industry forecasts to anticipate challenges and opportunities. This can help you adapt product offerings, marketing strategies, and operational processes to stay ahead of the competition. Additionally, retailers should review inventory management practices and supplier relationships to optimise stock levels and enhance supply chain efficiency. 

Finally, it is crucial to consider technological advancements and innovations that can streamline operations, enhance customer experiences, and drive growth in the future. By incorporating these factors into their planning, you can position yourself for success in the next financial year.

Prepare for the EOFY with confidence

Preparing for EOFY and tax time is a critical aspect of maintaining a successful retail business in Australia. By implementing the steps outlined in this comprehensive guide, you can ensure their financial records are in order, maximise tax benefits, and set a solid foundation for the year ahead. 

Editor’s note: The content in this post is intended for informational purposes only and should not be considered legal, financial, or tax advice. We recommend consulting with a qualified legal or accounting professional for personalised guidance. Where available, we have included primary sources to support our information. We strive to ensure accuracy however, we cannot be held liable for any actions taken based on this content. Please note that Lightspeed does not commit to updating or verifying any new changes to the information in this blog post after its publication.

News you care about. Tips you can use.

Everything your business needs to grow, delivered straight to your inbox.

More of this topic: Finance & Operations