Six tips for small businesses as the EOFY approaches
Some 11th hour advice to help get your finances organised before 30 June 2017.
Time is running out to get your accounts in order before tax time but don’t worry, it’s not too late!
Sam Allert, managing director ANZ of accounting software company Rekon, offers some tips for small businesses preparing for the end of financial year.
1. Take advantage of tax deductible expenses
“If you’re a Small Business Entity (SBE) with an aggregated turnover of up to $10 million, and thinking of purchasing a piece of equipment before 30 June 2018, keep in mind you can immediately deduct the cost of eligible assets up to $20,000,” said Allert.
For SMEs looking to take advantage of the tax write-off this financial year, make sure you finalise any purchases well before 30 June 2017.
2. Bring forward eligible expenses
“SBEs should also be aware they’re entitled to bring forward deductions on expenses for the next financial year, known as prepaid expenses. This is available where those services will be provided within 12 months of the date of expenditure.”
Allert says it is important for your business to check what tax deductions are excluded from this prepayment rule, with some excluded expenses being salary and wages, and purchases under $1000.
3. Write off bad debts
If your business has accrued bad debt, for example due to unpaid invoices, you have the option of writing it off as a tax deduction.
“The amount owing must be 12 months overdue to be classified as bad debt and the debt must be written off during the year. However, make sure you try all options for collecting your Accounts Receivable balance before deciding to write off bad debts as it will impact your profit,” said Allert.
4. Give to charity
“Check your donation is for an organisation with a deductible gift recipient endorsement on the ABN Lookup, and you are able to declare anything above $2. Keep track of your donations and you might find you have not only helped someone else but also helped reduce your tax bill as well.”
5. Keep all your business records
When it comes to keeping records for your business, you can never be too detailed. If you don’t already have a system in place for managing these records, now is the time to create one. The Australian Tax Office (ATO) requires you keep records for at least five years, although it’s recommended to hold onto them for about seven.
“Have a system in place to keep track of receipts, invoices and even a decrease in the value of your inventory found during a stocktake. If you’re using an online accounting software, record keeping is easy as it backs up to the cloud. This will protect your business from losing valuable information through a computer failure or misplaced papers,” said Allert.
6. Ensure all employee obligations are up to date
“If your business is registered for GST, you need to make sure your business activity statement (BAS) information is up to date. If you have employees, now is a good time to complete their pay-as-you-go (PAYG) tax reconciliations, and ensure their superannuation contributions are up to date,” said Allert.
Keen to save on energy, earn points or be gifted with free money for switching bank accounts? There's still time to snag a great finance deal before the EOFY.