If you’re a business owner, we’ve got some useful tips to help you manage your financial obligations and plan for the year ahead.
The end of financial year has a way of creeping up and catching us unprepared. But this time you can be ready, with a to-do list of tasks that you can tick off as you go. In this article, we take a look at what business owners need to get in order as we approach the end of the financial year.
Organise your paperwork
If you’re a business owner, the type of tax return you need to lodge will depend on the structure of your business. Your accountant will likely want to see your profit and loss statement for the financial year, plus your balance sheet, general ledger report and bank reconciliation report, so it’s best to get these ready in advance.
Reconcile your payroll
If you employ staff, you’ll need to give them each a payment summary by 14 July so they can lodge their own tax returns. You can also use this opportunity to check that your staff members’ salaries are in line with award rates and you’ve paid them the required amount of super.
Update your financial records
As with each monthly or quarterly Business Activity Statement (BAS) you lodge, make sure you have all the financial documents ready that you’ll need. The Australian Taxation Office website has a full list – and yours may include bank statements, a PAYG payment summary, receipts and invoices, and records of fuel tax and GST.
Check your depreciating assets
Until 30 June 2017(1) , businesses with a turnover of less than $10 million per year can now deduct the full cost of any depreciating assets under $20,000 (purchased before 1 July 2017) – and a portion of the cost of assets over $20,000. If you’ve made a purchase for your business in the past year, check with your accountant to see if you can claim a deduction.
Work out your deductions
Tax time is also when you should review your stock and see if you may be able to claim deductions on anything your business makes, buys or sells. You may even be able to claim a deduction for things like interest on business loans and overdrafts.
Plan your spending
As many of your business expenses may probably qualify for a tax deduction, it’s worth thinking strategically about when to pay them. There may be costs you want to pay now so you may claim a deduction for this financial year – and on the other hand, you may want to put off some payments so you can save the deduction for next financial year.
It’s always a good idea to speak to your financial adviser when you’re sorting out your finances for the year. countplus one can help make sure you have the right financial arrangements in place for your personal circumstances and lifestyle goals, so you can start off next financial year on the right foot.
1 The Federal Budget has proposed extending the $20,000 immediate deductibility threshold for the purchase of depreciating assets to assets used or held ready for use by 30 June 2018. At the time of writing, this proposal had not been legislated.
Tax planning is always important ahead of the 30 June end of financial year. This year, businesses and accountants alike face additional considerations after COVID-19 upended usual business operations and
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