Don’t groan at the thought of tax time. Embrace it. Go on the front foot … and go shopping. Here are seven things you must do before June 30.
1. Go shopping
If there is a fun part of tax time, this is it. You get a double whammy here … the pleasure of grabbing some cool new stuff coupled with reducing your tax bill for the Australian Tax Office (ATO). And there’s plenty of stuff to choose from.
First find out what you can legally claim as a tax deduction. This will depend on what type of business you run. For example, a tradie can claim immediate write-offs on his tools and machinery where a restaurant owner can install a new kitchen, and for those sole traders working from their home office, it’s time to upgrade the laptop and replace the wobbly chair and bookshelf.
In a nutshell, you can write off any asset costing less than $20,000 which you buy before June 30, 2017. You just write it off in the financial year in which you first used or installed it. The list is long but check with your accountant first so you don’t get stung.
The scheme was a hit with SMEs last time around. Businesses made claims worth almost $800 million in the past financial year which was almost double that of the previous year.
2. Choose the right accountant
Pick someone who specialises in your industry and not one of those “refund back in an hour” generalists you find in the local shopping centre. It may cost you a little more but normally pays for itself with the money you get back (and it’s tax deductible the following year).
Keeping in mind the changes to tax laws, it’s imperative to use someone who is across them. You could be missing out of thousands of dollars in refunds.
A good place to start is using a tax agent registered with the Tax Practitioners Board.
3. Get your head around the new tax laws
Sure the $20,000 tax break is the headline grabber but it’s only part of the picture. Small business will now pay the lowest company tax rate of 27.5 percent from July 1. Last year, the rate was cut from 30 to 28.5 percent (for businesses with a turnover of less than $2 million).
That threshold of what determines a small business ($2 million) has also been increased to $10 million so the number of businesses now getting the full tax break will reach a total of 870,000 businesses (up 90,000 from last year) who employ 3.4 million Aussies.
4. Get your finances in order
Grab yourself a strong espresso and go over your finances. Better still, do it with your accountant who can give your business a report card for the last financial year and start thinking about the next. Have you hit your goals? If you didn’t, why not, and what can you do hit them next year?
If you didn’t have any goals other than staying afloat and paying your bills on time, you need a rethink. And best do it now rather than in the busy peak months like Christmas.
The business.gov website has some great tips for managing your business finances.
5. Compliance and record keeping
Yes, it’s about as interesting at it reads, but here’s a few tasks on top of your tax return for your must-do list:
- Profit and loss statement
- Activity statements (PAYG withholding, fringe benefits tax, Goods and Services Tax)
- Super contributions under the SuperStream standard.
The ATO has a full list.
6. Update your business and marketing plans
This follows on from number four (your finances). These overall strategies and, in particular marketing, need regular attention because your industry is always in flux. Your customer last year, or even last month, may not be the same one it is today.
The way you do business must be as agile as the market you are in so your business and marketing plans should reflect that.
Download some great guides and templates on the business.gov website.
7. Protect your business (insurance and data security)
Securing your business doesn’t end with the nightly lock-up. It extends to making sure you’re covered with the appropriate insurance and backing up your data. This means having copies of all your important data from your accounts to your customer’s information. What if you lost everything tomorrow through a fire or theft, would your business go down with it?
The Australian Small Business Commissioner has more about insurance for business.