The countdown to the end of the financial year has begun, and its high time for pharmacy owners to take charge and prepare for a stellar finish. As we inch closer to 30 June, we often receive an influx of inquiries from pharmacy owners and managers, all echoing the same question: "What must we do before the year ends?" Well, fret not, for we have the answers you seek. In this article, we'll delve into the crucial items that demand your attention as you wrap up the year. Get ready to uncover the key tasks that will ensure your pharmacy enters the new fiscal year on a strong footing. Let's dive in!
Review your customer debtors outstanding balance
a. Write off any bad debts
You might be able to claim any amount that will not be recovered from your debtors as a tax deduction. You need to determine that the debt is genuinely bad if it’s very unlikely to be recovered through any reasonable attempts. These attempts can be demonstrated by communications to obtain payment of the debt, any reminder notices issued and phone calls made to the debtors.
We would recommend for pharmacy owners to do this before year ends so if there are any bad debts that needs to be written off, you can claim the tax deduction in the current financial year. It will also mean that you will get an accurate debtors balance at the end of the financial year.
b. Review owners shop accounts
Pharmacy owners normally have a customer account in the pharmacy for any personal purchases made in the pharmacy. If no physical payment is going to be made for this balance, the balance needs to be written off pre-30 June and taken up as drawings in the accounts as this is not a bad debt.
If physical payment is going to be made, this can be treated as normal debtors make sure payment is made before 30 June.
c. Write off shop consumables account
Pharmacies normally have a customer account for any stock that is taken for the shop use. The balance of this shop account can be taken up as a business expense. To get a more accurate debtors balance at 30 June, make sure you can write off the balance of this account as no payment will be received for this account.
Make sure you notify your accountant of any of these adjustments so they can take up these adjustments accurately in the year end accounts.
2. Review stock on hand
During the year, the stock level showing on the pharmacy point of sales might not be accurate and represent the true value of the stock that is currently held in store. This might be due to damaged stock, obsolete stock, stock that has gone missing, etc. Ideally, a physical stocktake should be done before 30 June to ensure that the stock on hand balance showing on the report at 30 June will be accurate and any damaged or obsolete stock can be written off in the current financial year. However, we understand that doing a physical stocktake can take a lot of time. Try incorporating rolling stock takes, where you review your stock level by departments in a more regular basis during the year. This will ensure your POS numbers are constantly updated and accurate.
If there was not any physical stocktake done during the year, what you can do before the year ends is to review your stock on hand report and if there are any negative stock quantity or dollar value, you can adjust this in the point of sales system so at 30 June, the stock on hand report will be a bit more accurate data. However, stock takes should be undertaken on a regular basis.
3. Make sure system has a clean cut off on 30 June
We believe that most pharmacy point of sales systems are all integrated and tills are automatically closed at the end of each business day. But if you still need to do this manually, you will need to make sure that all sales at 30 June are settled by the end of business day to ensure that there is a clean cut of 30 June and 1 July. This will make sure that your sales for the financial year is accounted for accurately.
4. Count all cash on hand
At the end of business day on 30 June, you will need to make sure that all cash on hand such as till float, change float, petty cash, etc. are all accounted for. Once all counted, you will need to retain a copy of the cash counted for you to send to your accountant.
5. Any new assets are invoiced and installed by 30 June
If you just recently purchased an asset such as computer system, furniture, delivery car, etc. for your pharmacy, if possible, make sure that all invoices are dated before 30 June and the assets are fully installed and ready for use by 30 June. In the 2024 financial year, small business with an aggregated annual turnover of less than $10 million will be able to immediately deduct the cost of eligible assets costing less than $20,000 that are installed ready for use between 1 July 2023 to 30 June 2024.
The bill was introduced to Parliament last year but they have yet to put this into legislation. Due to the extension of the instant asset write off recently announced in the 2024 - 25 Federal Budget on 14 May 2024, they have rushed this through and are still in the process of putting this into law at the time this blog was published.
6. Superannuation payment
June quarter superannuation payment is not due until 28 July and if payment is made on time in July, it will be deductible in the next financial year. However, if your pharmacy’s cashflow permits, you might want to consider paying the June quarter super before 30 June. Note superannuation is only deductible if it is paid and receipted by the super fund prior to 30 June. So, ensure any superannuation payments are received by the superannuation funds before 30 June, so you can claim the deduction in the current financial year instead.
7. Renew and pay pharmacy registration
Pharmacy needs to have an active registration in order to keep the business open. The pharmacy registration application declaration needs to be finalised before 30 June each year. In Western Australia, payment for the renewal needs to be settled by 30 June in order for the pharmacy to keep the registration and keep opening for business.
8. Review your insurance covers
If your pharmacy’s insurance cover ends on 30 June, you will need to make sure that you review your current policy’s coverage. If there are any changes to the circumstances on your current policy, you will need to notify your insurer to ensure that your pharmacy is covered from any damage and liabilities.
9. Review your employee records
After you are done with the final pay run for the year, it important to review your employee records and make sure that employees who are no longer with the business have been terminated from the system and any leave entitlements have been paid out. This needs to be done each year as you will need to report any termination done during the year to the ATO when you are finalising your Single Touch Payroll (STP) reporting. The STP reporting needs to be done by 14th of July.
In conclusion, meticulous preparation and planning are vital as we approach the end of the financial year, ensuring you have precise data that unveils the true financial standing of your pharmacy. By undertaking these essential procedures, you not only equip your accountants with the necessary information for preparing your financial statements and tax returns but also gain valuable insights into your pharmacy's performance. Keep in mind that the items mentioned above serve as general guidelines, and their applicability may vary for your specific circumstances. Don't hesitate to reach out to your accountant or, better yet, contact our team directly should you have any questions or need expert guidance. Bookkeeping is our specialty, and we're here to support your pharmacy's financial success.