As the financial year-end approaches, the task of reconciling records and examining expenses can be time-consuming, especially if your business lacks organization or automation. But fear not! We’ve got some top tips to make tax time smoother.
Mark Your Calendar
While June 30th officially signifies the end of the financial year, there are other crucial dates you should know. Make sure to file your business tax return by October 31st. If you work with a registered tax agent and book your appointment by October 31st, you may have until May 15th of the following year. Stay on top of your GST and Business Activity Statement reporting cycles, as well as quarterly superannuation payment due dates to avoid any penalties.
Understand Your Claims
Small businesses can deduct both running costs and capital expenses related to their business activities. Running costs encompass day-to-day expenses like rent, utilities, insurance, staffing, marketing, travel, and training. On the other hand, capital costs include the purchase price, transportation, installation, replacements, or enhancements of depreciating assets. Note that depreciation generally means a making a claim over several years as opposed to one – your tax accountant is best to advise on the specifics.
Consider Pre-Paying Some Expenses
This little-known strategy can reduce your taxable income. By making payments for expenses like rent, insurance, website domain registration, or subscriptions before the end of the financial year, you can often claim them as deductions in the current year’s tax return. Annual pre-payments may also be allowable in many circumstances. However, always evaluate your business’s cash flow and circumstances before prepaying expenses, ensuring that you genuinely need them.
Check Your Eligibility For Tax Incentives
Various incentives were introduced to support businesses during the COVID-19 pandemic. Temporary full expensing allows eligible small and medium-sized businesses to immediately deduct the business portion of eligible new depreciating assets. This incentive covers assets first held and used or installed ready for use for a taxable purpose between 6 October 2020, and 30 June 2023. Additionally, the Small Business Income Tax Offset offers tax offsets of up to $1,000 per year for eligible unincorporated small businesses, with the value determined by the Australian Tax Office based on your business income.
Plan Ahead for The Next Year
Implement a good system to organise all your financial records ideally specialised software like Xero. Keeping track of income, expenses, and transaction details in one place will save you from missing out on potential tax deductions. Remember, the ATO requires individuals and small business owners to keep records supporting their tax claims. If you have employees, ensure your software is Single Touch Payroll compliant to report payroll information directly to the ATO.
To make sure you don’t get overwhelmed during tax time, consider booking a consultation with one of our experienced tax advisors. They can provide personalised guidance tailored to your business needs, helping you navigate through the complexities of tax preparation. Don’t hesitate to reach out and schedule your consultation today.