May is well and truly here, which means the End of Financial Year (EOFY) is just around the corner. As a small business owner, it’s important you start preparing your finances early to avoid unnecessary stress, and to ensure you take advantage of every possible opportunity.
Instant Tax Write-Off
The Government’s instant tax write-off has been extended! This is great news for small business owners. Under the instant tax write-off, you can ‘instantly’ claim the business portion on depreciating assets – provided each asset costs less than $20,000, and was purchased between 12 May 2015 and 30 June 2018. You’ll also need to have installed the asset ready for use this financial year. As long as each asset is below $20,000, your business can write-off as many assets as necessary.
What’s the big benefit? This can help reduce your tax able business income. Your taxable income is your assessable income, less deductions (which is the amount you have spent on depreciating assets). So, if you increase your deductions, your taxable income decreases. This might also mean a decrease in your company tax rate. While this sounds like an opportunity to go buy all your necessary ‘big ticket’ assets at once, avoid purchases your business doesn’t really need. Remember, they’re still expenses.
If you need to purchase new assets for your business, it’s worth doing it before EOFY. Consider a small business loan from OnDeck if you need a cash boost to purchase these assets. Apply online now, it only takes 10 minutes and you could receive funding in as fast as one business day.
For more information, please refer to the many free online government resources available. It’s also a great idea to talk to your business accountant or financial adviser.
If your business sells stock, maybe you’re a retailer or wholesaler, it’s important to conduct a ‘stocktake’ before 30 June. For many businesses, this is a legal requirement for tax purposes. Determining how much stock you have left, and the monetary value of each item of stock will also help you when it comes to consolidating your Profit and Loss, as well as other financial statements. Pencil a time into your diary and let your team know in advance when it’s time for stocktake.
Taxes, taxes, taxes
Taxes are often seen as a burden that most business owners don’t really want to deal with. However, it’s extremely important to keep on top of your taxes. Before 30 June, determine how much tax your business will need to pay to the Australian Tax Office (ATO). Start working towards preparing your ATO payment and taxable summary reports, which you will need to submit to the ATO by August.
While the above tips might provide you with some direction on how to approach and prepare for the EOFY, it’s important to liaise with a specialist about your business finances. Whether that’s your business accountant or financial adviser, book in some time to go through what you need to do. This can really help ensure you are on top of your tax when EOFY comes around.
MYOB’s accounting software is also a great resource for your business when it comes to tax time. See how MYOB could help you consolidate your finances or manage your inventory, and take a look at their online guide to help you and your small business prepare for EOFY.