This situation may be common, but it’s also avoidable. May and early June is the perfect time of year to start getting organised, take a look at the year that was, and plan for a more organised and more profitable year ahead.
Here’s our advice for getting ready for the end of financial year, making the most of your deductions, and making the whole process as stress-free as possible.
1) Pay your superannuation
With compulsory superannuation going up last year, businesses must make sure they’re paying their employees the right amount of super, and paying it on time. Super is not tax-deductible unless it has been paid on time. Being up to date with all your payments is a good way of reducing your overall tax bill.
2) Pre-pay your tax-deductable expenses
An easy way for small and medium businesses to claim a few extra tax-deductions is to pre-pay or stock up on supplies that you buy regularly. This could include office stationery, bathroom supplies and equipment. By bringing forward this expense you can reduce your tax income for the current financial year.
3) Know which tax benefits you’re entitled to
Any business with a turnover less than $2 million is potentially entitled to a range of tax benefits, like capital gains tax, income tax, GST and fringe benefits tax. This is especially important for very small businesses, so make sure you know what you’re eligible to claim, and claim it.
4) Know about your depreciating assets
Small businesses may also be able to claim on the depreciation of assets that are worth up to $6,500. This usually includes things like office equipment, furniture, computers and printers. Make sure you keep track of all your assets (when they were purchased and the cost) and claim any potential tax deductions.
5) Write off bad debt
The average time that business-to-business payments are made is 56 days after the issue of an invoice. If you’re still chasing bad debts from the last financial year, now is the time to write them off. Bad debts are tax deductible and can be used to offset your taxable income.
6) Take a look at your cash position
A healthy cash position is important in the running of any successful business. If you know your cash position needs to be re-assessed, consider a commission advance loan to start the new financial year in the right way. It will give you peace of mind knowing you’re in a good position, even if you don’t use it on anything specific for your business.
7) Review your accounting systems
The end of financial year is the perfect time for an accounting spring clean. Make sure your software does everything you need it to do, and update all your tax and superannuation percentages to reflect any changes with the new financial year.
Getting organised for the end of financial year early is the key to making the whole process a stress-free and lucrative one. This is always an accounts-focused time of year for businesses, and if you do it well, you’ll be set up for a profitable year ahead.