For many Australians, June signals the arrival of winter, the beginning of the ski season and thoughts of a long weekend away for Queens Birthday.
However, for the owners of Australia’s 2.1 million small businesses, June can be a slightly more stressful time. June 30 represents the end of financial year (EOFY) and attention is instead focussed on getting financials in order and sorting out the dreaded… tax.
So with the end of financial year fast approaching, we’ve compiled 5 useful tips to get your business ready for the end of financial year and help you prepare for 2018/19.
Record keeping and compliance
June is the month to set your house in order. For your business, this means ensuring your records are up to date. It’s a great idea to ensure both your incoming and outgoing invoices are accurate. Other tasks may include:
- a summary of income and expenses in a profit and loss statement
- debtor and creditor record summaries
- meeting superannuation requirements
- lodging yearly reports or returns for PAYG withholding, Fringe Benefits Tax (FBT) and Goods and Services Tax (GST)
- collating records of asset purchases or expenditure on improvements
End of financial year is always a good time to find out what tax deductions you can claim. Most small business owners are usually filled with dread at the thought of figuring out how much they’ll need to pay the ATO. However, it’s important you put some time aside to stay on top of your tax numbers and there is a chance you may be able to claim deductions if your business is any of the following:
- has a website
- has motor vehicle expenses
- uses diesel fuel
- operates at home
- has travel expenses
- uses machinery, tools or computers.
Instant tax write-off
The write-off threshold of $20,000 has been extended to 30 June 2018 which is great news for Aussie small business owners.
In a nutshell, if you buy an asset costing less than $20,000, you can immediately deduct the business portion in your tax return. This will help reduce your taxable income significantly. The $20,000 threshold applied from 12 May 2015 and will reduce to $1,000 from 1 July 2018. If you plan to purchase new business assets before the end of financial year, a Live capital loan can help you with fast funding towards the purchase.
Like tax, stocktake is not something most small business owners look forward to. However having an accurate report of the stock you have on hand is essential to ensure any info you are passing to the ATO is accurate and up to date. Remember, you are legally required to do a stocktake if your 2017/18 income was over $2 million or if your inventory level has changed by more than $5,000 in the past year.
Review your finances!
End of financial year is the perfect time to sit down with your accountant or whoever oversees your business’ finances. Review whether you hit your targets and met budget over the past financial year and if not, make time to set goals for the forthcoming financial year.