The end of the financial year is fast approaching, which means it’s time for business owners to face the mammoth task of sorting through the previous year’s financials, writes Chris Dahl, Co-CEO, Pin Payments.
However, tax time doesn’t have to be a source of pain for small businesses. As EOFY approaches, business owners have a golden opportunity to maximise their tax returns whilst ensuring they’re in compliance with tax regulations.
10 tips for business owners ahead of EOFY
So, what are some tips to get organised ahead of time? Here are ten essential tax tips to help you organise your finances.
1. Get organised and utilise technology
Good record-keeping is essential for effective tax planning, but with today’s technology a lot of your record keeping can (or should) be automated. Xero, MYOB, Intuit and other payment platforms integrate with your business banking and make it much easier to keep a track of expenses and incomings. Likewise, certain apps enable you to take photos of your receipts in real time and upload them to your accounting or payments platforms.
If record-keeping isn’t up to scratch, you’ll need to ensure all your financial documents, including receipts, invoices and bank statements, are properly organised and easily accessible for your accountant. This will streamline the tax preparation process and help you identify any potential deductions or claims.
2. Make sure you claim all eligible deductions
There are many small business rebates and asset write-offs that you can utilise as a small business, which could prevent you from paying thousands from your taxable business income.
Common deductions for small businesses include expenses related to operating costs, advertising, travel, office supplies and professional services. However, it’s crucial to consult with a qualified accountant or tax advisor to ensure you are claiming the right deductions in accordance with the ATO.
3. Review your asset register
This time of year presents a great opportunity to review your asset register and determine if any of your business assets or tech are obsolete, damaged or no longer in use. By disposing of these before the financial year ends, you can claim a tax deduction for their value and potentially free up space and resources for new investments.
4. Consider additional superannuation contributions as a business owner
As a business owner, superannuation contributions are not only an excellent way to plan for retirement but also offer tax benefits. Making additional superannuation contributions before the end of the financial year can help reduce your taxable income and potentially lower your tax liability.
5. Take advantage of instant asset write-off
The instant asset write-off scheme allows small businesses to immediately deduct the full value of eligible assets purchased for business use. Investing in new equipment, technology or vehicles that qualify for the instant asset write-off before the financial year ends could see your business benefit.
6. Consider investing in new technology
If you have anything remaining in the budget for the year, now might be the time to purchase better tech which helps optimise or automate areas of your business. Whether it’s in marketing, AI, sales or operations, do an audit of your business processes and see where you could improve output.
You may find an investment now could pay off significantly in the long run, when it comes to productivity or innovation.
7. Pay attention to bad debts and unpaid invoices
Unpaid invoices can significantly impact your business’ cash flow, not to mention give your business a bad reputation with suppliers.
Before the end of the financial year, review your accounts receivable and identify any bad debts that are unlikely to be recovered. Writing off these bad debts can provide a tax deduction and help you manage your finances more effectively.
8. Superannuation contributions for employees
As a business owner, it’s absolutely crucial that you ensure you’ve met any obligations for superannuation contributions for your employees. If in doubt, check with a professional to make sure your compliance and legal obligations have been met and if you do have any outstanding contributions, make sure they are made before the end of the financial year to avoid any penalties.
9. Seek professional advice
Whilst it can be tempting to save pennies and do your own tax, business tax returns can be complex, time consuming and must adhere to regulations which often change. Consulting with a qualified accountant or tax advisor who specialises in small business taxation will ensure you don’t make any mistakes and also assist you to claim as much as legally possible.
A qualified agent will provide personalised advice which will be tailored to your business’ specific circumstances and structures, helping you navigate the intricacies of tax planning and ensuring you adhere to all relevant tax laws.
10. Invest in your staff
Lastly, the EOFY is a great time to evaluate the performance of your staff including their contributions, training and progress and to offer incentives for high value employees. It’s also often the ideal time to offer pay rises, increased training or other value-adds to those who make your business successful.
Investing in the people behind your brand will pay off in the short and long-term and create a culture of inclusivity and appreciation for those in your team.
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