Getting things in order for the ATO is just the beginning of what small business owners should do as the fiscal year comes to a close. It is also a time of evaluation and planning.
As yet another fiscal year draws to a close, many small business owners are looking for a system to not only minimize taxes this year, but make their business more profitable and less stressful this year. We are looking for strategies to introduce ahead.
The start of a new fiscal year is a time for owners to assess what is working in their business, what needs to change, and develop a plan for the next 12 months to ensure their business is running smoothly and It’s the perfect time to make sure you keep hitting your goals. need and thrive.
tax saving tips
But first things first. Here are some tax saving tips for small business owners for fiscal year 2022.
“All business owners should take the time to finalize their business plans at the end of each fiscal year.”
You’ve probably heard these before, but they’re a good reminder of what you can do to reduce your tax bill, and it’s something you can easily do before June 30th.
- Pay your retirement pension by June 30 for both yourself and your employees. To be tax deductible, the employer’s super contributions must be deposited into the employee’s super his fund or Small Business Super Annuation Clearinghouse (SBSCH) bank account by June 30. is needed. It’s not enough just for the funds to leave the business’s bank account. Always consider that the transfer will take several days, as any delay in processing may result in the funds not arriving in time and not being tax deductible until the next fiscal year. .
- Roll over payments for accounts that are due in July and August, or prepay accounts for services that are due in the next fiscal year. As long as the service is provided within 12 months, you can claim a tax credit for the account you paid for.
- Defer income collection until July. This strategy pushes the taxes payable on that income into the next fiscal year.
- If you are considering purchasing a business asset early in fiscal 2023, consider purchasing in June to take advantage of immediate asset depreciation.
- write off bad debts.
- If applicable, complete an inventory survey.
- Organize your records. There is nothing more expensive than paying for something and forgetting to claim it because you have no record or receipt.
It’s also a good idea to remind employees that payment summaries are no longer issued. This helps employees complete their income tax returns properly and early. they will thank you There’s nothing more frustrating than having to wait to file your tax returns and receive your long-awaited refund because your employer hasn’t finalized her STP filing.
If you are in the Buildings/Construction, Cleaning/Road Freight, Courier/Information or Technology/Security/Investigative/Monitoring Services sectors, complete your Taxable Payments Annual Report (TPAR) by August 28 to the ATO must be submitted to
The ATO has already indicated that it will fine businesses that are late in filing these forms. ATO fines are a double hit as they are not tax deductible.
As they say, knowledge is power, so get an accountant to do your tax returns as soon as possible so you know what you need to pay. You can build it into your budget. This allows you to make payments at times that are better for you and your business, thus reducing the impact on your cash flow.
Check legal structure
Once you have paid your taxes, the end of the fiscal year gives you the opportunity to determine if you are operating as the right type of entity. Perhaps you should trade as a family trust or corporation rather than as a partnership or sole proprietorship? Or vice versa.
The legal structure of a business determines tax obligations, responsibilities as a business owner, administrative requirements, and more. So it’s important to get it right. Do these other entities offer asset protection or tax minimization opportunities not provided by the current structure?
Take this opportunity to assess what is best for you and your business, and start fresh in the new year if changes are necessary. Always seek the advice of a qualified accountant before making any changes to your business structure, as they can lead to capital gains tax liabilities and other issues.
Evaluate your business plan
Of course, running a small business successfully involves more than just looking at tax strategies and legal structures. Your business should provide you with the income you need to enjoy the lifestyle you want and the freedom to relax and enjoy your downtime.
All business owners should take time at the end of each fiscal year to finalize their business plan for the next 12 months and review their business plan for the previous year.
An effective business plan helps you look at your business from the outside so you can ultimately tackle your business, not just your business. It gives you insight into the core of your business, what’s working, and of course what’s not.
Creating a business plan and reviewing it annually will give you clarity on what you need to focus on to grow your business. It helps clarify important professional and personal goals and establish strategies for achieving these. This is the key to unlocking your true business potential.
Business plans used to be long, heavy documents that were relegated to the bottom drawer of your work desk, never to be seen again. The new one-page business plan adopted by modern accounting practices is much more useful. These are concise, easy-to-read documents that bring together high-level strategies in one place, allowing you to:
- Articulate the vision and purpose of your business (what do you expect from others if you don’t know why you exist?).
- Understand your finances.
- Identify your goals and develop a strategy to reach them.
- Set a 90-day goal and hold yourself accountable to it. This removes one of the major roadblocks for small business owners: procrastination.
Your business plan should include total revenue targets and key performance indicators (KPIs). This allows you to record and measure progress, track improvements, and make adjustments in real time.
Now is the perfect time to reflect on the year and set business goals for the next 12 months. This will help you start your fiscal year strong and maximize your chances of business success in the coming year.
This article first appeared in Issue 37 of the Inside Small Business Quarterly
EOFY Tax Tips and Future Plans
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