14 May How to prepare for EOFY
Tax time. Two words that can strike a mix of fear and dread into the heart of a small business owner. But they don’t have to. Smart operators treat the end of the financial year as a valuable opportunity to get the books in order, review their expenses, introduce new technology and maybe even score a tax refund.
Here are five things you should now be turning your attention to if you’re a business owner.
1. Wrangling your receipts
You can reduce your taxable income by claiming tax deductions for most costs incurred in running your business. But you need to provide evidence of those business expenses (you’re also required to keep financial records for at least five years, just in case the ATO decides to re-examine your finances at some future date).
Ideally, you will have used an app or accounting platform to digitally file all the relevant paperwork. If not, now’s the time to collect all the invoices, receipts, credit card statements and payroll data you have scattered around desk drawers, filing cabinets and glove compartments.
Given the complexity of Australia’s tax system, and the tax deductibility of the cost of managing your tax affairs, it makes sense to pay an accountant to determine what deductions, concessions and rebates your business is eligible for.
2. Taking advantage of the instant write-off
Are you a small business owner with an aggregated turnover of up to $10 million? If so, you can purchase eligible assets before 30 June 2018 and immediately deduct up to $20,000.
“Just make sure you finalise your purchase soon if you want to take advantage of the write-off,” says Sam Allert, managing director of Reckon ANZ says.
Businesses can also bring forward deductions on expenses for the next financial year, such as office supplies, stationery, insurance and rent. “But certain expenditures are excluded from pre-payment rules, including amounts of less than $1,000 and payments of salary and wages,” Allert warns.
3. Reviewing your insurance coverage
Many time-poor businesspeople take a set and forget approach to their insurance. That can result in having insufficient cover or paying for policies that are no longer necessary.
Especially if you’ve added a new product line, hired more staff, purchased new machinery or expanded into new markets and locations over the last 12 months, the end of the financial year is an appropriate juncture to review your insurance needs. Steadfast insurance brokers have the training and experience to help ensure you have the correct cover. They can also act as your advocate if you ever do need to make a claim.
4. Seeking legal advice
The end of the financial year is also an excellent time to review client agreements with your lawyer, advises Courtney Bowie, founder of virtual law firm Her Lawyer.
“The [2017] budget failed to rein in late payment times from bigger businesses, so SMEs need to find ways to ensure they’re paid on time and with minimal effort,” Bowie says.
5. Making things easier for next year
If you haven’t already, it really is time to get with the automation program. Adam Griffiths of DMCA Business Advisory points out that by implementing a cloud solution business owners can streamline cash flow, payroll, invoices, compliance and reporting.
“Cloud services ultimately provide better efficiencies and enhanced productivity, which makes a business far more agile and adaptable as it grows,” Griffith says. “Plus, clients are more tech savvy, meaning it’s becoming an expectation.”
You should also review your finance options (loans, overdraft and equipment leasing) to make sure they still meet your current needs. It’s a rare business that can’t save at least some money through restructuring loans or renegotiating the terms of leases.
“The end of the financial year is the perfect opportunity to do a thorough review of your income streams and outgoings.”
“A good time to look over everything”
Emma Barr founded The Barr Essentials, a digital lead-generation agency, four years ago. She found her first couple of EOFYs challenging. “I’ve learnt to leave the tax side of things to my accountant, who is now a trusted advisor, rather than trying to do everything myself,” she says.
Barr sees the end of the financial year as “a good time to look over everything”.
“You adjust contracts, renew insurance policies and buy equipment as the need arises,” she says. “The end of the financial year is the perfect opportunity to do a thorough review of your income streams and outgoings. It’s also a chance to work out how you’ve done in comparison to previous financial years and whether you’ve hit your revenue and growth targets.”
Barr has big plans for this EOFY. “I’ve been making do with a basic payment system but I want to upgrade to a platform such as Xero,” she says. “I also want to take advantage of the $20,000 tax write-off by buying some new equipment and upgrading my computers.”
Source: – https://www.steadfast.com.au/well-covered/business-edge/2018/04/ways-to-prepare-for-tax-time.aspx