4 things you can do drop your tax bill
Tax can often be one of the biggest expenses of a small business.
With so few relishing it, that’s often because they don’t understand it.
Business owners, in particular, need a strategy other than ‘just tell me when to pay my next bill’ to see the impact on bottom line.
A planned approach is always better, and it’s never too late. Here are four top tax tips to help small business owners keep more of their hard-earned cash out of the ATO’s coffers.
1. Bring forward any known business expenses into this financial year
If there are known expenses in the coming month for your business, then bringing them forward and remitting payment before June 30 can give you a deduction. There are some pre-payment rules so it’s always best to check these with OBT first.
Small businesses with annual turnover of less than $2 million can take advantage of the current tax break for assets purchased under $20,000 being eligible for an immediate depreciation write-off. Small businesses can do this before June 2017 although, depending on the result of the election and upcoming legislation, businesses with turnover between $2 million and $10 million may also soon be eligible for this.
2. Count it before 30 June to write off dead wood
If your business sells products and not just services, a pre-30 June stocktake is in order. If you know you won’t be able to sell certain items or lines, then they are obsolete stock and there’s no point hanging onto them.
Often tax returns will be done post-30 June and contemplation of what the stock might have been is often a guesstimate after the event. But stocktaking on 30 June can deliver benefits of writing off any old stock in your business that no longer has resale value.
3. Topping up super and fast-tracking payments before 30 June
If you have employees you must pay the super guarantee quarterly. As a self-employed individual, you can make your own contributions, which are tax-deductible.
For employees’ super, while the superannuation guarantee is only due the 28th day following a quarter, for the June quarter that amount isn’t deductible if it’s paid in July, so paying that June quarter super on or before 30 June brings forward that expense to the current year.
4. Review receivables for debtors in the business to write off any bad debts.
Got any debtors who won’t pay? Time to let them go?
Obviously the favourable outcome is to collect outstanding debt but, if a debt is realistically unrecoverable, you could write it off as a business expense. Make sure you check with OBT first.
Each 1 July is a great time to review your tax habits, your processes and strategies for the coming financial year.
Setting goals and focusing on your budget and cash flow is imperative to a smooth-running, successful business.
At OBT you’re guaranteed our fast tax turnaround, so get on the front foot and use tax time to plan your business and your tax properly. We are more than tax accountants; we specialise in business improvement and look at your overall tax position to plan ahead for profit and cash flow success!