It’s no secret that EOFY can be a major pain. For hospitality businesses it can be especially challenging as a seven day work week and breakfast to lunch trading hours can mean taking time out to do your tax work is near impossible. We understand, but if you’re the owner of a hospitality business, there are some key ‘To Do’s’ for EOFY that will not only make your life easier; but can have a huge impact on the success of your business in the new financial year.
It may seem counter productive, but spending money during EOFY can actually work to save you in the long term, just so long as you spend in the right areas. To ensure you can make the most of your EOFY activities we’ve put together some key tips on where to spend and how to save.
1. Know your dates and pay your bills and wages early
Plenty of people leave it until the day of 30 June to pay their rent and bills, but remember that some payments aren’t processed until the next business day, and this year June 30 falls on a Sunday. Leaving it until the last minute to pay could be a risky move this year. To ensure you can claim your expenses in this tax round, aim to pay your rent and utilities on or before Friday 28 June.
Regardless of whether you are on a monthly, fortnightly or weekly pay cycle, consider if it’s worth bringing your pay round forward to get an extra cycle into this financial year to cut your tax bill. If cash flow is a barrier to paying your staff early, a short term loan can take the pressure off and actually help you save money.
2. Buy your new equipment to leverage the instant asset write off
Need a new coffee machine? Fridge? Commercial kitchen appliances? Well now is the time to buy! From 2 April 2019 the instant asset write-off increased to $30 000 for each asset, with the asset write off extended until 30 June 2020. So for eligible small businesses, any assets worth $30,000 or less that are installed and ready to use after 2nd April 2019 can have the business portion of the asset immediately deducted*.
Whether you’re upgrading your existing kitchen equipment or hanging out for a new piece of machinery to make your production more efficient, investing now can slash the tax bill and have your business ready to roll into a new financial year.
3. Pay your invoices
Even if you have time on your side, it pays to take care of any outstanding payables this side of the financial year. Many suppliers will be happy to negotiate early payment discounts to settle their ledgers and balance accounts, so take advantage of EOFY to reduce your expenses. Even if it means reworking your budget now or sourcing financing to pay off the invoices, the amount you can save is significant.
4. Do a stocktake & take advantage of product sales
Yes we know, stocktake can feel evil, but it’s also a necessary evil that actually benefits you. In fact, when harnessed the right way a proper stocktake can save you thousands, plus it gives you a clear overview of where your business is at and the value of the product you are sitting on.
If you turn over more that $10 million, you are legally obliged to undertake a formal stock take. If you turn over less than $10 million you can reasonably estimate whether there you have stocks valued at more than $5000 as you may be entitled to tax deductions or GST credits for these goods.
5. Buy up on discounted products
One of the big benefits of stocktake is the discounted products available through EOFY sales. Just as you’re getting your head around your own product levels and what’s moving, the likelihood is your suppliers are doing exactly the same! Whether it’s dry goods, food packaging, merchandise or alcohol, most suppliers will be trying to move excess stock. Once you’ve identified your stock levels and what you’re low on, make the most of the sales and shop smart and in bulk. Buying now can mean big savings over the long run.
To make the most of EOFY talk to us on 1800 676 652 about a small business loan so you can set your business up for success in the new financial year. You can also apply online now with our hassle free, 10 minute online application.
*Please seek advice from your tax advisor regarding your eligibility for the Australian Government’s simplified depreciation of assets for small businesses, and how this will impact your business. Assets must be bought and used or installed ready for use to be eligible. For further information on the Australian Government’s Instant Asset Write-off Scheme, including up to date information on eligibility and the write-off threshold, see the ATO website at: https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/