Tax time for businesses

It’s never too early to plan for tax time and with 30 June less than one month away there are a few things you should be thinking about to get your business in shape.

Get your records in order 

Running your own business is rewarding and time consuming. Just running things on a day to day basis often takes priority over keeping your financial records up to date.

Without up to date financial records you won’t have enough information for year end tax planning.

And if you leave it until the last minute before getting your financial records in order you won’t have enough time to put in place any money saving strategies you might have planned, by the time 30 June comes around.

To get the best tax outcome at 30 June you need time, and up to date financial records, to benefit from all the potential tax deductions your business might be eligible for. 

Book a meeting with Wilson Teis today to find out how we can help you get things in order and potentially lower your tax bill.

Take stock

If you’re in the business of manufacturing or selling products now’s the time to start planning your stocktake.

A stocktake lets you accurately determine the value of stock held and identify obsolete or damaged items that you might be able to write off with the potential for a tax saving.

Tax benefits aside, a stock take is also a great way to identify any inventory management issues such as over ordering and theft that could help with cash flow management.

It can also help identify what’s selling fast and what’s not so popular, so you order the right level of the right products or parts.

Identify deductions now

Knowing what you can and can’t claim is half the battle at the end of the financial year. Keeping up to date with any recent ATO changes in legislation is crucial for taking full advantage of any tax deduction you might be eligible for.

In 2015 the ATO introduced a number of new deductions including the small asset write off which lets small businesses claim an immediate deduction for the full value of assets purchased up to a value of $20,000, but only until 30th June 2017.

Talk to Wilson Teis today about eligible small assets purchases your business might be planning and avoid the mistake of one Queensland small business who didn’t talk to their accountants before buying $23,000 worth of new equipment. They weren’t able to get an immediate deduction for even part of the cost of the purchase under this rule and it all had to be capitalised and depreciated instead.

Timing is everything

Knowing the difference between purchases you can claim as you incur them and purchases you can claim over time will help you plan spending in the run up to the end of the financial year and get the maximum benefit from these deductions.

Bringing forward year-end spending is great in theory but you need to balance it against the cash flow needs of your business; paying up front could cut your immediate tax bill but if it leaves you without enough funds to operate it might not be worth it.

If you have got some upcoming bills to pay such as vehicle servicing or website costs, or you were planning to buy some office equipment then it might be worth bringing forward any payments. For purchases you would be making in the short term anyway it’s worth getting the tax benefit sooner.

For expenses you tend to pay in advance such as your annual business insurance you can claim an immediate deduction if your turnover is less than $2m and the goods or services, like insurance cover, will be received within a 12 month timeframe.

Different industries have access to different tax deductions. For example sunglasses, sunhats and sunscreen are all deductible expenses if you work outdoors in your business. So it’s worth being aware or having a chat to your accountant about what items you can claim.

Plan for the long term 

The end of the tax year can also be a prompt to tackle some of the bigger decisions you might have put on hold and if you are struggling to keep your financial records in order it could be a flag that your system is not up to the job anymore.

If you have been thinking about upgrading to an accounts package such as Xero or MYOB now’s the time to talk to Wilson Teis about making the transition. Not only will you kick off next year with a new system in place but you’ll also get the tax benefit for any eligible expenses you incur before 30 June.

Getting advice on tax planning is more than just knowing what you can and can’t claim and the end financial year is the ideal time to review your historic and projected cash flow and business performance with your trusted advisor.

Understanding how your business is performing will help you make the right tax planning choices such as:

• Using the cash flow from a bumper year or the sale of an investment property to make additional contributions to your superannuation. It could reduce your tax bill and give your super a much needed boost
• Deferring or staggering non-essential spending such as technology or vehicle upgrades to optimise cash flow if business performance has been below par
• Being prepared for bigger non-operational cash flows such as BAS or GST payments if business has been booming

Tax planning is just one part of your wider business strategy and if you’ve been thinking about getting professional advice now is also a good time to get consultants on board since any pre invoiced upfront costs will also be tax deductible in the current financial year.

• Get help with next year’s budget and cash flow planning from Wilson Teis and kick off the new year on a better foot
• If your business is growing, talk to Wilson Teis about how you build the team and support that growth without compromising cash flow
• If your industry is experiencing a downturn now is the time to get advice on restructuring in 2016-2017 and kick off the new financial year in good shape.

The dynamic team at Wilson Teis can help you with practical tax planning that will work for you and your business at the end of the financial year.

Call Wilson Teis today for a discussion about how we can help you get the best return at tax time.