We have some end-of-the-financial-year tips for businesses we’d like to share. Primarily, as a business owner, you are responsible for keeping accurate records and paying the right amount of tax on time.
Most of the income you receive from conducting your business is considered by the ATO as assessable income. On the other hand, you can claim tax deductions for most expenses you incur in carrying out your business. They must, however, be directly related to earning your assessable income.
Types of business expenses you may be able to claim deductions for include:
- day-to-day operating expenses
- purchases of products or services for your business
- certain capital expenses, such as the cost of depreciating assets like machinery and equipment used in your business.
The ATO has 3 golden rules for claiming expenses
- The expense must have been for your business, available as an allowable deduction and not for private use.
- If an expense is a mix of business and private use, you can only claim the portion used for your business.
- You must have records to prove it.
Now let’s check out our end-of-the-financial-year tips for business.
1. Review financial records
Make sure all financial records, including income and expenses, are accurate and up to date. This will help streamline the tax filing process.
2. Inventory management
Conduct a thorough inventory check and write off any obsolete or damaged stock. By doing this, you can help reduce your taxable income and streamline your inventory for the next financial year.
3. Identify and claim eligible deductions
Identify all eligible business expenses and deductions that can be claimed. In general, this may include expenses such as:
- rent,
- utilities,
- office supplies and equipment, and
- employee wages.
4. Superannuation payments
Make sure all employee superannuation contributions are up to date and paid before the end of the financial year. The ATO provides information on what to do if you are an employer and do not pay an employee’s super guarantee (SG) on time or to the right fund.
5. Depreciation and asset write-offs
Review your business assets and assess if any are eligible for depreciation or immediate write-off. This can help reduce your taxable income and potentially improve cash flow. Eligible businesses can claim a range of tax concessions, offsets and rebates. For example, the small business energy incentive.
6. Prepay expenses
By considering prepaying certain expenses for the next financial year, such as:
- rent,
- subscriptions, or
- insurance policies,
you may help reduce your taxable income for the current year.
7. Review and reconcile GST
Ensure that your Goods and Services Tax (GST) records are accurate and up to date. Reconcile any discrepancies and ensure that your Business Activity Statement (BAS) is lodged correctly.
8. Research grants and incentives
Look into any government grants, incentives, or programs that may be available to your small business. These can provide financial assistance or support for specific activities.
9. Update business plans and goals
Importantly, our end-of-the-financial-year tips for businesses include that you take the time to review your business plans and goals for the next financial year. To do so, you should:
- analyse performance
- identify areas for improvement and
- set new targets.
10. Seek professional advice to achieve your best
Contact our team of experts today if you need help in reviewing your financial position, require guidance on tax planning, and ensure compliance with any changes in tax laws or regulations.