FINANCE 23
PREPARING YOUR PRACTICE FOR EOFY AFTER A BUSINESS YEAR UNLIKE ANY OTHER IN RECENT MEMORY, THERE WILL BE SOME UNEXPECTED CONSIDERATIONS FOR PRACTICES FINALISING THEIR BOOKS AT THE END OF THIS FINANCIAL YEAR. / GORDANA MILOSEVSKA
Gordana Milosevska, founding director Management for Design
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s a leader it is your responsibility to not only exercise your expertise in the running of your practice, but to also identify what areas require expert advice. A common aspect of running an architecture, engineering or design practice in which creative leaders may lack confidence is financial management and preparations for the end of financial year and tax season. Management for Design has created a list of recommendations to be considered in the lead-up to the end of the financial year, and the impending tax deadline.
1. Consider your income You should ensure that the fees for projects worked on in the month of June are captured as income, and then that income should be reviewed to ensure completeness – i.e. that all billable projects worked on throughout the month (and indeed the rest of the year if you have not already) have been billed. JobKeeper payments are considered assessable income and so need to be included on your tax return; however, cashflow boost credits are classed as non-assessable income and so your practice will not pay tax or GST on them. Some practices may consider a deferral of their assessable income – check in with your finance expert when deciding.
ISSUE 168
2. Capture your expenses All costs should be captured and substantiated for the month and/or financial year to ensure appropriate tax deductions are available. A good rule of thumb to follow is that a deduction is available for expenses that cover a period of no more than 12 months. By way of example: n insurance premiums n internet and telephone services n rent n subscriptions, and n donations. Are all considered deductable expenses. It is usually prudent to bring forward any deductable expenses, such as
subscriptions and insurance premiums, so the deductions can be made for the current financial year and count towards reducing taxable income.
3. Review aged debtors Once all avenues have been exhausted in collecting an outstanding debt, consider writing it off as a bad debt. Practices should review all outstanding debt to assess the likelihood of recovery and to ensure that debts with poor prospects of resolution are identified and declared prior to year’s end. That way they will not be included as assessable income. If you have any clients that are operating on the cash method, you can additionally use this time to encourage
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