Being tax-smart pays off: EOFY tips for young companies


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Being tax-smart pays off: EOFY tips for young companies

With all the excitement of starting a small business also comes the learning curve of doing your taxes for the first time. Doing the taxes for your small business or speaking to your accountant may not exactly be the highlight of your year, but the windfall could be! By being tax-smart, you could make significant savings, which could be used to reinvest in your company. Here are some tips that may help you to get through the end of financial year period stress-free.

No matter what your business does, every small business owner can benefit from being tax smart.

Get everything in on time

The sooner you speak to your accountant, the better. On top of advising what you can expect to pay in taxes, and what expenses you can claim as deductions, your accountant can also give you guidance on how to minimise the tax you will owe, for example, by purchasing new equipmenti,ii. Therefore, it's best not to leave the appointment with your accountant until the last minute.

This year, the 30th of June falls on a Monday, so you should ideally be aiming to have all your administrative work done by Thursday the 26th of June. Also, be aware that you need to allow banking systems up to three (working) days for funds transfers, so you should aim to complete all your financial transactions by Tuesday, the 24th of Juneii.

Stay on top of changes to tax regulations

Recentlyiii there have been changes to depreciation rules for businesses with a turnover of less than $2 million; the instant asset write-off threshold has increased and you now may be able to claim an accelerated deduction for new motor vehicles as well. There have also been changes to superannuation rates, which could affect you if you have employeesiv.

To be certain about which new regulations will affect your business, check the Australian Taxation Office website and speak to your accountant. For example, you might consider prepaying some of your business' expenses, but, you'll have to investigate what you can prepay and whether you have adequate cash flow to do soi.

The Australian Taxation Office offers a service called 'Small business assist', which makes it easier to access information about your taxes, and provides information that may be relevant to your business.

Speaking to your accountant and being aware of changes to tax regulations can save you a lot of money at the end of the financial year.

Be aware of your obligations

This may seem obvious, but when it comes to the end of the financial year, it's essential for small business owners to have their financial records in order. Especially if it's your first year doing your company taxes, be sure to do your homework, and know exactly what your tax obligations are. For example, keep comprehensive records when buying, owning or selling business assetsiii. Some of your yearly responsibilities as a small business owner may include conducting a stocktake, summarising your records of debtors and creditors, and completing your fringe benefits tax return. If you're unsure about any of your obligations, you can find more information on the Australian Taxation Office website.

The end of the financial year doesn't just mean a chance to make tax savings for your small business; it's also a great opportunity to start planning for next year. It's a good idea to use this time of year to sit down with your accountant or bookkeeper, review your budget and see what you can improve on or do differently next yearii. Some planning at the start of the year could leave your business in an even better financial position for 2015.


iAustralian Businesswomen's Network 2013, End of financial year small business tax tips, viewed 14 April 2014,
https://www.abn.org.au/blog/end-of-financial-year-small-business-tax-tips/

iiAustralian Businesswomen's Network 2013, Boring bits of business: 10 tips that could save you $$ at tax time, viewed 14 April 2014,
http://www.abn.org.au/blog/boring-bits-business-tax-time/

iiiATO 2014, Simplified depreciation rules, 8 January, viewed 14 May 2014,
https://www.ato.gov.au/business/small-business-entity-concessions/in-detail/income-tax/simplified-depreciation-rules/

ivNAB 2013, 'EOFY tips for small business from the ATO', NAB Business research and insights, viewed 14 April 2014,
http://business.nab.com.au/eofy-tips-for-small-business-from-the-ato-3913/