We all know it can get a little hectic at the end of the business financial year with tax time coming up, so we thought we’d put together some helpful advice on five important last minute small business tax tips to do before June 30.
You can get an immediate tax deduction for certain prepaid business expenses.
The basic rule is that a deduction is available for expenses that cover a period of no more than 12 months.
These can include insurance, subscriptions, telephone and internet, rent, accounting fees, trips and many more.
If you run a small business and have the spare cash, it makes sense to take maximum advantage of the $20,000 instant asset write-off.
This allows you to claim an immediate tax deduction for all capital purchases costing less than $20,000, rather than depreciating the cost over several years.
This is great for tech items such as computers, tablets and phones, as well as tools and equipment for tradies, office furniture and even motor vehicles.
If your business is one of those, head out to make purchases and make sure the items you buy or finance are installed and ready for use by Saturday to lock in the deduction this financial year!
The allowance is available to all businesses with an aggregated turnover of less than $10 million.
If you’re about to send out a bunch of invoices to customers before 30 June, consider holding off until next week. Any invoices you send out from July 1 will fall into the next financial year, so you will defer your tax liability on that income.
You may not actually save tax overall, but you will move it into a different period and from a cash flow perspective that can be a very valuable benefit for small business.
If your business is looking to pay bonuses, put in place a properly executed bonus plan by June 30.
Typically, a deduction will be available for employee bonuses if the expense has been incurred before the year end. If the amounts of any bonuses are not calculated and authorised until after the end of the income year, no deduction is available.
No business wants to be in a position where it can’t recover outstanding debts, but we have to be realistic because it does happen. The good news is that if your business has to write off an issued invoice, a tax deduction may be available.
At this time of the year, it makes sense to go through your debtors list and identify debtors who you believe can’t or won’t pay. Make sure you must keep a written record to document that the debt has been written off.
Year-end tax planning has its place but, to be honest, if you’re taking important financial decisions in the final few days of the financial year you’re not really planning; you’re simply reacting to opportunity.
Make a new financial year resolution, organise a meeting with us early in the new tax year to do some structured longer-term planning for the year ahead and assess your business and personal financial goals. Whether that includes growing your business, improving productivity or preparing for an exit, you need time and good advice to put in place the plans that will enable you to meet your goals.