If you’ve owned your business for a while, you will no doubt have some learnings from previous years.
Here’s a few recommendations from us:
Forecast the expenses you know you will incur in the new financial year and, where feasible, try to pay for them ahead of time and you may save in tax. These may include: paying leases, business insurance, business related travel, telephone and IT services.
You should also take this time to complete a thorough stock take and write-off any damaged or unsellable items.
If you haven’t been doing it already, take this time to organise your invoices, receipts, credit card statements, employee records and anything else related to your business for tax time.
Self-employed Australians can sometimes find themselves in a tricky position at tax time, so it’s important you stay on top of your income tax obligations. If you struggled to meet your tax obligations last year you may want to consider setting up a separate savings account into which to deposit the amounts you set aside to pay your tax. The same applies for Goods and Services tax (GST). If your business turnover exceeds $75,000, you’ll be required to pay GST.
You may also be able to claim operating expenses directly related to your business which may include: advertising, depreciating assets, utilities, business related travel, repairs and maintenance. You may be entitled to capital gains or goods and services tax concessions. These will vary depending on your industry, the size of your business and the way it’s structured.
Take advantage of the small business instant asset write-off which allows small business owners (with turnover of less than $10 million) to deduct business related purchases under $20,000.
Unlike PAYG employed Australians, the self-employed don’t automatically have super contributions made for them each pay cycle. Generally speaking, if you are self-employed or a sole trader, you won’t have to make superannuation payments for yourself. However it’s advisable to make personal contributions in order to prepare for retirement. Fortunately, you can claim a deduction for contributions you make to your super.
Your business is your livelihood. If you were to fall ill, is there someone who can take the reins so you can continue to receive an income? If you answered ‘no’, you may want to consider protecting your income with insurance. Fortunately, you may be able to claim tax deductions on the premiums you pay on income protection, which could save you over time.
Speak to a professional
While you may be able to plan for most of the financial year yourself, you should never underestimate the value of qualified, professional advice. You should consider consulting an accountant, as they may be able to help you avoid mistakes at tax time and make the most of your deductions.