Many small business owners can become so focused on the day-to-day operations of running their business that they leave their End of Financial Year (EOFY) tax planning to the very last minute. This can make settling accounts and meeting compliance regulations a daunting process when your to do list is already exhaustive. But it doesn’t need to be this way — to make things easier, we’ve put together some EOFY tax tips and tax planning strategies for small business owners to help ease the burden and ensure you’re prepared well in advance.
The do’s of small business tax planning
There are many things you ‘should’ be doing, or strategies to adopt, to make your end-of-financial-year tax planning as seamless as possible. They can be things such as:
- year-round recordkeeping
- investing in software training
- writing off expenses and business tax deductions
- year-end planning.
Ensure year-round recordkeeping
Recordkeeping is not just our biggest ‘do’, it’s an activity that should be performed throughout the year, which can make all the difference come tax time. From submitting each transaction into your accounting system and separating personal from business items — the more you keep on top of things throughout the year, the less effort you’ll need to spend preparing for EOFY. Similarly, if you’re practising optimal recordkeeping, you’ll find it becomes easier each year. This is due to familiarisation as well as tech improvements.
Using intuitive accounting software like Xero and cloud folders like Fileshare will increase operational and workflow efficiencies, freeing up time to improve your product or service, consulting with customers and strategising.
These programs also enable document sharing with your accountants and other parties so that changes can be made in real-time and document control is maintained.
Which introduces our next tip…
Invest in software training
Time constraints can pose an issue, preventing owners from fully understanding the capacity of their accounting package. This is where the assistance of a tax advisor for small business owners can help greatly.
While the constant evolution of accounting software has simplified the bookkeeping for small business owners, not learning how to execute their various functions can be just as inefficient as manual processing. Set some time aside each year for training, ensuring everyone involved in the tax process understands the new features. You can also use this time to assess whether your accounting package is right for you.
Write off expenses to maximise tax deductions
Business tax deductions are an integral part of the tax process for small businesses. Continuous recordkeeping makes you less likely to miss any deductions that could reduce your tax liability. Start by reviewing your debtors, inventories and fixed assets accordingly to write-off any:
- debts that are not recoverable
- stocks that have become obsolete, and
- assets no longer able to generate revenue.
Many expenses can be written off if they have a legitimate purpose within the business. Costs such as commercial rent, equipment and business travel are all able to be written off to maximise your small business tax returns.
There is also the small business $20,000 instant asset write-off to consider for 2025. To be eligible, your business must have an aggregated turnover of less than $10 million.
Year-end planning
Make sure you take the time to forecast your likely profits and taxes applicable for the year ending. Ensure that you put aside cash to pay any remaining taxes and consider any additional deductions you can incur prior to year-end to keep the income down where possible.
The don’ts of small business tax planning
While there are many things you are encouraged to do either before the end of the financial year or when planning the upcoming one, there are certain things you shouldn’t do. You can avoid common tax mistakes by making sure you:
- don’t overlook key tax due dates
- don’t forget to maintain your financial records
- don’t ignore the importance of business advisory for tax planning
- never overdraw.
Don’t overlook key tax due dates
Due to heavy workloads, competing priorities, or confusion from working across various tax jurisdictions, small business owners sometimes struggle to prioritise their tax obligations. However, it’s highly important they’re prioritised, or you could be hit with ATO penalties and interest. Non-compliance can also flag you with the ATO for a more detailed review or audit.
One of the approaches the ATO is taking in the current year is to significantly reduce the ability to get an extension of time to lodge. They have also made it far more difficult to have interest remitted, and from 1 July 2025, any interest paid will now be non-deductible.
Contact a William Buck advisor or your chartered accountant to understand your tax obligations and prioritise key due dates. Advisers may be able to assist with entering an instalment arrangement with the ATO (if required).
Don’t exercise inadequate maintenance of financial records
As already noted, it’s important to keep up with your recordkeeping year-round. But it’s also important to do so correctly. Proper recordkeeping provides an accurate and reliable account of the financial position of a business, enabling the business owner to determine how it’s performing and identify opportunities to improve. Consider the following:
- lock all accounts relating to the financial year so that date remains accurate, ensuring easy transition into the new financial year, and
- create a separate copy of the accounts and back it up (print key reports like P&L, Balance Sheet and general ledger listing for the financial year and store them securely).
Don’t ignore the importance of investing in expert assistance
With cost-of-living pressure and high interest rates, we’re all looking for ways to minimise our expenses. But cutting costs on advisory services is highly inadvisable. Moreover, you shouldn’t make an important business decision without consulting a professional. Doing so could result in missed opportunities, non-compliance, a surprise high tax bill or increased commercial risk.
Don’t overdraw!
Finally, and this is a big one, if you have a company and you take money out of the business, make sure the net position of funds introduced, less any funds you withdrew, is not overdrawn.
If you have taken money out of the company, work with your advisors prior to year-end to determine whether the amount represents the following:
- salary and wages (report this on your Business Activity Statement)
- dividend (Dividend resolutions and statements to be prepared)
- formal loan agreement in place to meet the Division 7A requirements including the required term and ATO interest rates.
If you do not get the treatment correct, you may end up with a deemed dividend that will usually be a poor outcome for the company and yourself.
Final checks
Using a tax time checklist for business owners is one of the best ways to ensure your EOFY preparations are conducted correctly. Here’s a quick one for you to use:
Do | Don’t |
✅Keep records year-round | ❎Miss deadlines |
✅Invest in software training | ❎Neglect proper recordkeeping |
✅Write off eligible expenses | ❎Skip expert advice |
✅Plan ahead | ❎Overdraw company funds |
For more information on any of the above or assistance preparing your tax, contact your local William Buck advisor.