Don’t go making crazy purchases without reviewing where you are at, and speaking to your tax accountant.
EOFY deals are great for salespeople trying to meet their commission targets, they might not really benefit you and your business.
Review your position
You can’t make sensible last minute decisions without data.
Let’s get your Xero file (or insert other software here) up to date, process everything still outstanding so you know exactly where you stand. There is not a lot of benefit spending more money, if you are already in a loss position. If you are in a surprise profit situation, it would be good to know before its too late to take action.
Speak to your expert and get customised advice about your situation.
Owe money to your business?
Speak to your accountant about potential division 7A issues & tax consequences of loans to associates.
Your business is separate to you – its money is not necessarily yours to spend. If you cannot repay your business you’ll need to look at a formal loan agreement, your accountant can help you. You can no longer backdate wages due to Single Touch Payroll and super deadlines. Non-complying wage and director payments are also not tax deductible. Speak to your accountant about documenting your loans properly, right away.
Review your wages
Will you reach the payroll tax threshold?
Caps are prorated if you operate in multiple states.
If you’ve tipped over the threshold this year, you’ll need to register and make payments. Check the rules in each state you operate in. Be aware of entity grouping and contractors could be included in the wage total.
Fringe Benefits Tax may need to be included on group certificates – personal use of company cars is the most common example, but if the business has paid for gym memberships or other personal expenses for employees, this will need to be recorded.
Review your contractors
Are they deemed employees?
Some contractors may also be entitled to super and count in your payroll tax thresholds.
The ATO re-released their test tools in December – take another look if you haven’t recently.
Sole traders who bill you for labour are probably entitled to super – the same rules and deadlines that apply to staff apply, so you may have late super issues that need rectifying.
Certain contractors need to be reported to the ATO on Taxable Payment Annual Reports, a bit like group certificates, but for subbies of construction, IT, security and cleaning businesses.
Review open sales invoices
Chase up open sales invoices.
No chance of collecting? Write off bad debts and start the new year fresh
Tidy your accounts receivables to start the new financial year, review all open sales and chase up the slow payers.
An online payment gateway might be a good option to remove friction from the payment process – the easier it is to pay you, the more likely you are going to get paid.
Review open purchases / bills
Are they really payable?
Have you paid them out of the wrong bank account?
Review your accounts payable for accuracy, are there bills sitting there that you know are paid?
What about bills you won’t pay, perhaps they were issued in error or the service was never delivered, request credit notes.
What about big ticket purchases? We’ve been conditioned to expect instant asset write offs – this is not normal, and nothing has been legislated for this year yet! Instant Asset write off is not a bigger tax deduction – it just changes the timing
The Small Business Skills and Training Boost is an extra tax deduction and its coming to an end on 30th June – you receive an extra 20% tax deduction for eligible training ** you’ll need to check the fine print. Your accountant will add the extra line to your tax return to claim 120% of the cost.
Don’t forget, the definition of an Entrepreneur is someone who develops, organises and runs a business enterprise, accepting risk and uncertainty in order to make a profit. Showing a profit and paying tax may in fact be a good idea if you want to apply for finance in the future. Short term gain of paying less or no tax may result in long term pain.
Any questions, sing out!
