Ah, the end of the Financial Year… It’s arguably the time of year that business owners like the least. But, it’s also an important opportunity to capitalise on tax incentives. Check out our 8 tips for getting through June 30 with minimum stress.
1. Maintain your expense records
If you’re not already doing it, then set aside some time to categorise all your expenses. It’s imperative to keep good records – think about everything including:
- Motor Vehicles
- Marketing – Advertising, PR, directories, business cards, printing, domain hosting
- Entertainment – Staff/Client gifts and meals
- Office expenses such as stationary, postage, utilities
- Accounting and legal fees
- Salaries, wages
- Telephone and internet
- Donations to charity
The technology available to help you manage your records is plentiful. If you’re not already using MYOB, Xero, Reckon, or a similar tool, consider trying them out! The time you’ll save will be worth every penny of your subscription fee.
2. Consider your investments
Remember that one of the largest factors that determine your tax bill will be what you invest in. If structured correctly, tax-advantaged investments such as shares and property could reduce your tax bill.
3. Write-off your assets
Keep up to date with how your business can benefit from the asset write-off scheme. Instead of claiming deductions bit by bit, the scheme allows you to deduct the full value of every asset purchased to the value of $20,000.
4. Consider how you value inventory
Inventory can be valued at cost, market value or obsolete stock value. If you have obsolete stock, think about writing it off fully.
5. Remember, interest is deductible
Don’t forget that interest paid on borrowed funds such as overdraft, credit cards and loans for business use can be claimed. Consider if you should be prepaying any interest in advance as this is a tax deduction as well.
6. Super is just… well, super!
It’s commonly forgotten that super is great from a tax perspective, given it’s low tax rate on earnings. Talk with your accountant about how you can maximise super contributions to achieve more significant savings.
7. Don’t shy away from bad debts
The end of the Financial Year on June 30 provides an opportunity to write off any bad debts. Be aware you must do this before the end of June, not after, irrespective of when you complete your return. You’ll need have documentation to support the write off, including measures made to recover bad debts. Make sure to document what the debts are and the efforts you have made to recover them – if your business is cash-based, it’s not as easy to write off bad debts as they won’t have previously been included as income.
8. Review your business structure
Prior to June 30, conduct a review of your business structure. Consider whether you should trade your business as a company or trust – and make sure you do this before June 30! Talk with your accountant about the best structure for your business.
While it’s tempting to try and save a few dollars and do it all yourself, using a professional will almost always save you money. So, our bonus tip for you (no surprises here!) is – get an Accountant!
The more organised your records are when you submit them, the less time your accountant will need to spend on them. An accountant knows the ins and out of the tax system and will maximise your savings every time. Good luck as we approach June 30 – stay calm and carry on!