Tax time always seems to creep up on us every year before we’re really ready. This can leave plenty of business owners at a loss for time to catch up on any taxation plans they wanted to implement.
As a business advisor with an accounting background, I tend to try and remind businesses to think about tax all year round. But I’m a realist enough to know that most people only start to think about it as June 30 approaches.
So, here is a quick reminder of 7 things you can do now before the end of the financial year hits us.
Super Guarantee Contributions
Don’t forget to pay your Super Guarantee contributions before June 30. Any contributions you pay for staff before this time are deductible in this financial year. Besides, if you miss the deadline date you risk being slapped with a penalty fee.
Personal Super Contributions
If you intend to make any personal contributions into your superannuation fund, get these in by June 30 to ensure they’re tax deductible. Just be sure you don’t breach the cap limits set for contributions.
Look for any expenses you may be able to pre-pay before June 30, regardless of what the due date is on them. If you have business loans you may be able to prepay the interest. This makes those payments deductible in this financial year.
Write off Bad Debts
If you have tried everything to get your non-paying creditors to pay outstanding amounts and you’ve given up hope of ever seeing that payment arrive, it may be time to write off that debt amount. If you do this before June 30, it’s deductible now.
Get Your Books in Order
Take the time to sit down and really look at your business’s profit and loss statements. This includes reviewing your insurances for both business and personal use. It should also include reviewing your sales figures and your profit margins on sales. Take some time to review your business plan to ensure you’re really on track. These things combined will give you a much clearer image of your overall financial picture and make it easier to see how much focus needs to be spent on tax strategies next financial year.
If you’ve put cash into your business as a private loan, be sure you repay yourself before the end of the financial year. The same is true in reverse, if you have taken a private loan out of your business, pay it back prior to June 30.
Think of some business assets you need that you may be able to claim an immediate deduction for and then go shopping. This might include buying new computers, machinery or equipment, or even a new car. There are certain rules around purchasing plant and equipment that can allow you to claim a certain amount up front as a total tax deduction (check with your accountant).
While these tactics might help you to minimise the amount of tax you pay overall, it’s still important to consider your own business’s cash flow first and foremost. After all, you need to have the available cash reserves to pay for those purchases first, so don’t spend money to get a bit of a tax benefit. Work out your cash position first and talk to your accountant about your options.