Not sure where to start? We’ve brought on four superstar accounting professionals to help us put together a comprehensive EOFY to-do list. That means actions you can take now to set yourself up for success next financial year.

Save yourself the stress and anxiety, get your ducks in a row now, and come into July 1 feeling fresh, organised, and prepared.

1. Find an accountant you love

If you don’t have a tax professional that you trust with your life (or your business), now is the time to find one.

• Understand what you need your accountant to be able to do. For instance, if you need someone to help you with tax-related tasks, make sure you seek out a registered tax or BAS agent. If you’d like someone to help you out with accounting software, make sure you seek out someone who is across technology. Always use the Tax Practitioners Board Register to find a registered tax agent.
• Book check-ins with your accountant throughout the year, not just when BAS is due or at tax time.

“These check-ins aren’t just about ticking compliance boxes – they’re about strategy, clarity, and making sure your business is actually working for you.”

Catarina Santini, business advisor, accountant, and tax agent

2. Educate yourself

Whether you’re a brand-new entrepreneur or a seasoned business owner, you should be across your own finances.

• Browse the ATO’s Tax Time toolkit for small business, which they describe as a “one-stop shop” for tax-related help.
• If you’re after more structured learning, check out the ATO’s “essentials to strengthen your small business” platform; this offers short courses on topics like record keeping, cash flow and deductions.
• Each quarter, the ATO changes shares its small-business focus areas to help small-businesses and their tax professionals understand how they can get and stay on top of their tax, super and registry obligations. You can check this on the ATO’s website: “Small business focus areas”.
• Look up whether any legislative changes are coming up that might affect you. If you have employees, for instance, check for any upcoming changes to awards on the Fair Work Ombudsman’s “Major award changes” page, for instance.

3. Review your needs and obligations

Maybe your turnover has increased, you’ve employed new staff, or the nature of your business has changed? There are many cases in which your business’s needs and obligations might have changed. Review how things have changed for you in the past financial year and what that might mean.

• Review insurances: Do you need extra cover due to changes in business activities or income? Or are there insurances you no longer need?
• Review payroll tax obligations in your state, if you have employees.
• Check if you need to register for GST for the first time, or if you will need to soon.

4. Get organised

If you’re not keeping track of sales, money might be going down the drain. Keeping receipts is essential; if you’re ever audited by the ATO, bank statements won’t cut it.

• Use the ATO’s record-keeping evaluation tool to help you evaluate your current system, if you’re unsure about it.
• Consider using the ATO app if you’re a sole trader.
• Assess whether you (really) have a system that allows you to log invoices, receipts and expenses both regularly and accurately. If not, it’s probably time to get your accounting software in order (see below).

5. Set up new software

If you need new software, make sure you leave plenty of time to get it working (and integrated into your processes) before the new financial year starts, to set you up for success.

• Assess your existing accounting software – is it working for you? Can you create efficiencies? If you want to change software or start using it for the first time, leave plenty of time to research and implement. 
• Book a training session with your accountant (well in advance of June 30) to help you set up new software, if you feel you need to do so.

6. Create some quick cashflow wins

• Review pricing – compare your rates with industry standards and factor in rising costs.
• Set up an automated transfer to send some money to a dedicated tax/GST savings account.
• Use the ATO’s Cash Flow Coaching Kit, which has tips to help you meet tax and super obligations without them getting caught up with your business cashflow.
• If you’re struggling to get paid on time, consider automating invoices and setting up direct debits from clients.
• Check your bank accounts for long-forgotten free trials etc – services you don’t use or seldom use. There are software services that can help you do this, for a small fee.

7. Calendarise your year

Make it easier for yourself to keep up with key dates by putting them in your calendar now.

• Ask your accountant for key tax dates – or find them on the ATO website – and put them into your calendar.
• Mark down upcoming legislative changes that are relevant to you. The ATO also has on its website a page dedicated to tracking upcoming legislation and a small-business newsroom. You may also want to ask your accountant about this if you’re unsure what will affect you.
• Map out income and expenses ahead of time, as best you can.

8. Identify (and prepare for) deductions

Make sure you’re not missing out on any deductions. Your accountant should be able to help you work out what you can deduct.

• Identify potential tax deductions: home office expenses, vehicle costs, professional development, underused assets and excess stock, bad debts, and so on.
• Identify pre-paid business expenses – like insurance premiums or telco services – and ask your accountant whether you can get an immediate tax deduction on them.
• Ensure that all June-quarter superannuation contributions are paid by June 30, to accelerate the tax deduction.
• Consider voluntary super contributions before year-end to maximise tax benefits and boost retirement savings.
• If your business is looking to pay bonuses, put in place a properly executed bonus plan by  June 30 to claim the deduction this year. 
• Consider how your trading stock is valued. Trading stock can be valued using different methods for taxation purposes – at cost, market value or replacement value. Changing the valuation method at year-end for tax purposes can either bring forward or defer an amount of taxable income so it pays to look closely at the method adopted.

“Provided they are used for business purposes, for instance in work recreation areas or office receptions, it is even possible to claim items like TV’s, gym equipment, works of art and computer gaming terminals. If you’re claiming more left-field deductions like these, make sure you keep proper records.”

Mark Chapman, Director of Tax Communications, H&R Block

Thanks to the following tax and accounting experts who contributed to this checklist.

The post The comprehensive EOFY checklist for small-business owners appeared first on Inside Small Business.

With increasing financial challenges this year for Australian SMEs such as inflation, rising wages and high petrol prices, tax obligations may not have been front of mind for many small-business owners.

Chances are your resources, budget and manpower are already stretched when it comes to maintaining your accounts, however, it’s important to be on the front foot with accounting as it can be one of the most critical aspects of business success.

Here’s how you can avoid making simple accounting mistakes –

1. Track your business transactions

Keep a record of all your business transactions. Have digitised copies and paper backups for future reference and to maintain the health of your business. Don’t forget records of employee compensation, utility expenses and cash receipts. If you’re audited by the tax office you will be required to show records of all your business expenses, even the small ones. Consider implementing financial tools that can help you automatically monitor your business transactions and create a backup in case of an emergency.

2. Communicate effectively

Your bookkeeper should have a good understanding of your company’s financial performance at any particular time. Ensure that you clearly understand and communicate regarding your financial records, reports and any other vital statements relating to your business. They need to know what’s going on – be that small or large transactions, or new finance arrangements or structures.

3. Keep up with paperwork

Make sure you keep your books up to date. Falling behind on paperwork is one of the most common mistakes we see small-business owners make and if you fall behind on billing customers you may find yourself with a debt that never gets paid. There’s also the risk of other payments being late that you may be liable for fines and penalties from the ATO. With the rise of online accounting software, Xero, MYOB etc, staying on top of your accounting is simple.

4. Budget for every project

For every new project you start with your business make sure you have a clear budget set out from the beginning. Those that don’t do this often find they’re setting themselves up for financial failure. You don’t want a significant portion of your cash flow utilised unless you’re getting a good return on your investment. Look back on past projects to determine an accurate budget based on what you’ve spent before.

5. Don’t mix personal and business accounts

Mixing business and personal accounts makes it harder to track business expenses and you might miss an expense that could have been a tax deduction. Having a separate business account also gives lenders an understanding of your finances if you’re applying for a loan or an alternate funding options like invoice financing. You want to make sure you maximise your credit score to obtain the best financial solution for your business.

6. Don’t be afraid to delegate

Sometimes small-business owners are unwilling to outsource essential tasks to save money. This is understandable however eventually you will need to outsource sufficiently in order to scale your business to expand. Focus on what you’re good at doing and pay specialists to handle necessities such as your accounting. Having expert advice will help you to maximise your income and any financial or strategic opportunities whilst also minimising your taxes.

The post Accounting mistakes: where your small business is going wrong appeared first on Inside Small Business.

A total of 51 per cent of Aussie SME owners expressed regret of not being organised with their receipts, which has been attributed to the perceived laborious process of keeping records and being diligent in their tax records, something time-poor business owners without the right management systems already struggle with. And 19 per cent of SME decision-makers admit they feel anxious about doing their taxes this year, while 13 per cent are feeling overwhelmed. Only 36 per cent of SMEs feel prepared for tax season this year.

The research also noted that keeping accurate records of expenditure via receipts is proving to be difficult for SMEs, with 47 per cent admitting that their receipts have faded from the sun, while 42 per cent have misplaced or lost receipts during tax season. Almost a quarter of respondents, 24 per cent, said they have been unable to claim a business expense in the past due to paper receipts being illegible or damaged.

QuickBooks stress that, given the current cost-of-living crisis, every dollar counts and improving processes for already time-poor business owners has never been more important.

“For SMEs, using technology effectively to avoid receipt regret at tax time is more crucial than ever”, Damien Greathead, Accounting and Advisor Group Lead at Intuit Australia, said.

Additional time spent preparing for the end of financial year tax has also added stress for SMEs according to the report, with 23 per cent saying it affects their overall work-life balance. In detail, 25 per cent said they spend about 10 hours preparing for their tax return, while 13 per cent spend 15 hours or more. Surprisingly, 40 per cent reported taking on the task themselves by completing their tax return without the help of an expert advisor.

The research also showed that 33 per cent of the businesses surveyed want streamlined digital solutions (receipt management) and 29 per cent want more reliable storage methods to help improve efficiency at tax time. 

“It’s concerning to hear that so many SMEs are experiencing this level of stress at tax time, because help is available,” Greathead said. “Small Businesses are the backbone of our economy, but so many small-business owners are time poor and burdened by admin tasks that impact their work life balance. 

“Our advice to small businesses is, you don’t have to go it alone,” he added. “Working with an advisor in conjunction with reliable and affordable accounting software can make a huge difference to keeping on top of business admin and managing stress.”

The post ‘Receipt regret’ costing SMEs millions in lost potential revenue appeared first on Inside Small Business.

The survey, which focused on the sentiments among SME leaders on EOFY, found that the leading source of overwhelm during EOFY was navigating tax compliance (33 per cent). This was closely followed by gathering financial data (32 per cent), the time investment required (30 per cent), staying on top of receipts (28 per cent), and balancing financial deadlines with day-to-day operations (26 per cent).

“Our new research demonstrates that EOFY can be a difficult period for small businesses,” Anthony Drury, Managing Director for ANZ at Xero, commented, “It adds greater pressure on time, resources, and is compounded by the challenges they are facing in the current economic climate, from the rising cost of living to a drop in small-business labour productivity. Our aim for this research is to highlight these common pain points around EOFY preparations, so we can provide practical tips for small businesses to use right now.”

The study reveals that 56 per cent of small-business owners confessed to making a mishap in their past EOFY preparations, with the most common of these mishaps being the misplacement of important documents or receipts (32 per cent), forgetting to claim a significant deduction (31 per cent), entering of incorrect figures that lead to tax errors (14 per cent) and accidental deletion of crucial financial records (11 per cent).

When asked what the biggest EOFY misconceptions were, respondents selected ‘itʼs just a one-day event’ (47 per cent), ‘itʼs easy to prepare for’ (43 per cent) and ‘itʼs only about taxes and paperwork’ (42 per cent).

“We always encourage small-business owners to connect with their accountant or bookkeeper throughout the year to make EOFY preparations easier,” Drury said. “EOFY highlights how important those relationships are as advisors can help to alleviate pressures, from managing records and financial statements to understanding tax compliance.”

“Complementing your accountant or bookkeeper’s advice with digital tools is an excellent way to automate repetitive tasks such as receipt capture, invoicing and bank reconciliation, and help manage the risk of errors,” Drury added. “Xero’s research shows how powerful digital adoption can be in terms of boosting productivity outcomes, as it allows small-business owners to spend less time labouring on manual tasks and more time focusing on running their business.”

The post EOFY causing stress and mishaps among small businesses appeared first on Inside Small Business.

“Small businesses regularly have resource constraints and often prioritise their day-to-day operations or financial need over cyber security,” MYOB CEO, Paul Robson, said. “Yet small businesses remain a gateway to gain access to other clients, business partners and suppliers working with the business, making them an entry point for hackers.

“From our latest MYOB Business Monitor research of small businesses, we found that 41 per cent of SME respondents don’t feel prepared for a cyber attack,” Robson added. “That’s why we must all work together so that every small-business owner and every small-business employee knows the basic things they can do to protect themselves.”

Cyber Wardens, supported by the Australian government, has launched a free EOFY guide, a quick-reference tool that educates small businesses on what to look out for and how to combat the increase in cyber threats at EOFY that include impersonating the Australian Tax Office (ATO), the government’s MyGov website and financial institutions.

COSBOA CEO Luke Achterstraat pointed out that small businesses lose an average of $46,000 in an online attack.

“Unfortunately, tax time is a prime hacking season, and small-business owners and their staff need to be prepared and alert to online threats,” Achterstraat said. “That’s why we are delighted to work with MYOB to spread the word among small-business customers.”

The post COSBOA and MYOB urge small businesses to be extra vigilant during EOFY hacking season appeared first on Inside Small Business.

Take advantage of the instant asset write-off

One of the best tax breaks for small business is the instant asset write-off which means that you can score an immediate tax deduction for the costs of capital assets costing up to $20,000 if your business turnover is less than $10 million. With many businesses offering EOFY promotions, now is the ideal time of year for your business to take advantage by acquiring some much-needed assets to build your business and, at the same time, reduce your taxable profits.

The scheme is scheduled to run until 30 June 2024 so you have a limited time to take advantage of the scheme. Whilst now isn’t the ideal time to make large capital purchases for many small businesses, if your business needs to invest in new capital equipment and has the cashflow (or the borrowing capacity) to finance it, now is certainly the time because generous tax breaks like this may not last.

Prepay expenses

You can get an immediate tax deduction for certain pre-paid business expenses.  The basic rule is that a deduction is available for expenses that cover no more than 12 months. That covers expenses such as insurance premiums, telephone and internet services, subscriptions to trade or professional bodies, rent or leasing charges on your premises and bookings for seminars, conferences or business trips.

Pay superannuation

Employers have to pay superannuation contributions within 28 days of the end of the quarter. Ensure that all June quarter superannuation contributions are paid by 30 June to accelerate the tax deduction. Note that contributions must actually be paid, cleared in the business bank account and received by the employee’s super fund before 30 June for a tax deduction to be available. Any other outstanding amounts should also be paid before year-end.

Write off bad debts

If your business has to write off a debt, a tax deduction is available for the amount of the debt written off.

A debt that is unpaid and deemed to be a bad debt is an allowable deduction provided it was included as assessable income in the current or a previous income year. Go through your debtors list and if there are any debtors on it who you believe can’t or won’t pay, write off those debts by 30 June to claim the deduction this year. The business must keep a written record to document that the debt has been written off.

Get the right trading stock valuation

Damaged and obsolete stock can be written down or written off entirely and a tax deduction claimed – now is the time to crystalise that tax deduction.

The ‘Golden Rule’: keep records

Good record-keeping is your best friend for efficient business management and will also make life easier if the ATO asks you questions. It’s essential that records are kept to substantiate what’s in your tax return; any unsubstantiated deductions, for instance, are generally not allowable.

Tax law requires that records be kept for five years, and they should include:

• sales receipts
• expense invoices
• credit card statements
• bank statements
• employee records (wages, super, tax declarations, contracts)
• vehicle records
• lists of debtors and creditors
• asset purchases.

Records can be kept on paper or electronically but should be easily retrieved. In our experience, businesses often stumble when asked by the ATO to verify transactions by providing supporting records, with the consequence that even “innocent” businesses can find themselves stung by the tax man where they are unable to provide the requested evidence.

The post Six tax tips for your small business this EOFY appeared first on Inside Small Business.

But it doesn’t have to be this way. According to Retinue Accounting Co-founder Steven Nicholson, many business owners are simply paying more tax than they should.

“Unfortunately, it’s all too common for business owners to get to the end of the financial year, let their accountant prepare their tax return, and be hit with tax bill shock,” Nicholson says. “Oftentimes they’re not getting the timely accounting advice that they need throughout the year, or they have got caught up in the day-to-day running of their business that they have lost track of all of the deductions that they are entitled to claim. “But with a basic strategy and armed with a few simple tactics, business owners can significantly reduce their tax liabilities and preserve the cash they need to hit the next financial year running.”

Let’s look at some practical ways you can reduce your tax bill.

Know your eligible deductions – and claim them

The simplest way to reduce tax is also the most obvious – claim all available deductions. Yet business owners are often so busy running their business that they fall behind on the paperwork, tracking and reporting that can help maximise their deductions come tax time.

Any expense that has been incurred in generating your taxable income should be a legitimate deduction. There are the obvious write-offs including workers’ salaries, utilities, vehicle, and travel expenses, but also additional items such as repair and maintenance costs, depreciating assets and interest on business loans.

“It seems simple, yet too often we see business owners not claiming all of the deductions that are available to them,” Nicholson says.  “Don’t leave cash on the table. Get your financial records organised and make sure you exhaust every opportunity to claim a deduction for your business.”

Pre-pay expenses

Small businesses can pre-pay up to 12 months of certain deductible expenses before the end of the financial year (such as rent, subscriptions and utilities), and accelerate the timing of deductions. However, while pre-paying those expenses can be an easy way to reduce your tax bill, you still have to find the cash to pay those costs in the first place. This is where business owners must strike a balance that suits their particular financial circumstances.

“Each business is different, and their financial priorities vary,” Nicholson says. “You have to ask yourself: is saving tax my main priority right now, or do I need to preserve the cash? Consider your particular situation if you are thinking about pre-paying deductible business expenses.”

Claim the Instant Asset Write-Off now

For most small businesses, the Instant Asset Write-Off allows an immediate deduction on the full cost of eligible assets up to $20,000. But there’s a catch – those assets must be first used or installed ready for use before 30 June 2024. If you want to leverage the Instant Asset Write-Off this financial year, you better act fast.

“One of the main benefits of the Instant Asset Write-Off is that it can be claimed multiple times, it doesn’t need to be limited to one asset,” Nicholson says. “A good example would be a commercial kitchen which would require purchasing a number of high-value items that meet the deduction criteria. Rather than purchasing those new appliances in a single transaction, potentially you could purchase them all separately and claim the Instant Asset Write-Off multiple times.”

Defer work

Can you hold off on scheduling a job or piece of work until July? Have you already earned enough for the current financial year? Is it time for a much-needed holiday? If so, by deferring new work to the 2024/2025 financial year you can limit the amount of assessable income subject to tax in this financial year.

“It’s a luxury that may not be available to many business owners,” Nicholson admits. “But it could be an option for some, and worth exploring to help lower your taxable in this financial year.”

Need a hand getting your business ready for EOFY? Get your free guide to Preparing for the End of Financial Year or call Retinue Accounting on 1800 861 566 for a free initial consultation.

The post Four ways to reduce your business tax bill this EOFY appeared first on Inside Small Business.

“This financial year has seen the insolvency ‘dam’ begin to break, which is why EOFY provides a good opportunity to truly assess how your business is going,” Gareth Gammon, Insolvency Australia Director, said. “We’ve spoken with a number of insolvency specialists who have similar advice: it’s the perfect time to ‘get your house in order’.

Patrick Coghlan, CreditorWatch CEO, said that insolvency primarily occurs due to problems with cashflow and, ultimately, a total lack of it.

“Therefore, get your ledger in order now to start the new financial year in the strongest possible position,” Coghlan said. “Now is the time to collect on outstanding payments to help your business better manage EOFY tax and superannuation obligations.”

Joseph Sleiman, from insolvency specialist firm Sleiman & Co, also shared that EOFY is a good opportunity to review a company’s tax lodgement compliance and make a plan for the new financial year to at least bring them up to date, as well as assess and control any tax or other debts.

“Keep up to tax with tax lodgements. It keeps you closer to your accountant, who may be able to advise you at an early stage to seek the assistance of a registered liquidator,” Sleiman said. “By keeping tax relationships transparent, there’s less chance of the director going too far over the line of incurring substantial tax and other debts, and thus causing potentially life-changing or irreparable personal financial damage.”

John Kukulovski, Partner with insolvency solutions and restructuring firm RRI Advisory, noted that EOFY is a challenging time – even for businesses that are doing well.

“It’s crucial that directors use this time to take stock of their company’s financial health and identify any opportunities and issues for the coming year,” Kukulovski said. “As insolvency professionals, we all too often see directors trying to take on new challenges without knowing how their company is holding up. You can’t chart a new course without a map!”

Ben Verney, Founding Partner at boutique insolvency and restructuring practice, Greyhouse Partners, pointed out that EOFY preparation generally means company accountants tidying amounts and balances in the chart of accounts for statutory reporting and tax accounting purposes.

“If this process helps directors look closely at the level of business commitments (liabilities) and compare these to short-term cash availability (liquid assets), then EOFY planning is a welcome opportunity to do so,” Verney said. “The risk of insolvency is decreased if this process is performed regularly. Preparing and analysing business cashflows and forecasts is optimal if performed monthly. Daily/weekly is best, and quarterly is reasonable.”

Frank Lopilato, National Head of Restructuring & Recovery with RSM Australia, also shared that setting up a clear cashflow budget for the financial year helps business owners gain a better oversight of their business and pre-empt issues that may arise from cash deficits.

“With the change and volatility of economic factors, it is critical that business owners maintain optimisation of their cost pricing to cover overheads and pricing accordingly, ensuring the company is profitable yet still maintaining competitiveness and demand,” Lopilato said. “In the tough economic environment we’re in, it’s further needed to boost these considerations by not optimising cost pricing but rather working to make a sale by improving marketing, customer relationships and the quality of goods and services.”

The post Businesses urged to ‘get their houses in order’ for EOFY appeared first on Inside Small Business.

Email marketing

Utilising email direct marketing (EDM) to target existing customers with your EOFY offers is a great way to guarantee your target market is aware of upcoming promotions. Your existing customers have already established a relationship with your business and are the easiest demographic to convert to sales. Therefore, rewarding them with either early access to EOFY deals or increasing their discount strengthens your customer relationships and in return boosts sales.

Social media

Nowadays, social media has surpassed search engines for opinions and reviews for products and businesses. 60 per cent of people between the age of 18 to 54 prefer to use TikTok, Twitter or similar apps for authentic advice on a product or service they intend on purchasing. A key component of your EOFY marketing strategy should be based on customer satisfaction and loyalty.

Positive brand searches on social media can be increased by, promoting products through micro-influencers that your target customer deems trustworthy and reliable. This is a great form of third-party validation for your offerings.

Creating organic content that is relatable to your customers is another way to increase brand searchability when consumers are looking for recommendations on social media. Incorporating relevant keywords into social media post captions will also boost search capabilities.

Re-marketing

Targeting consumers who have previously shown an interest in your business by using retargeting digital advertisements, can also be effective for your EOFY marketing. AI technologies and cookies from past ads and/or website visits find consumers to retarget based on past interactions with your business to remind them of EOFY sales, and special offers.

Additionally, retargeting ads can be personalised based on the specific product or past ad interactions which can make ads even more relevant to the individual. These can run on a variety of platforms, including Google Ads, Facebook Ads, and many other online platforms. Retargeting ads are a powerful and often affordable tool for businesses looking to increase conversions and drive sales and should be implemented in an EOFY marketing strategy.

eCommerce promotions

Promoting and listing eCommerce through social media apps such as Instagram and TikTok is a proven strategy to boost sales. 80 per cent of consumers prefer to purchase products directly from social media rather than a brand’s website, increasing the convenience of impulse purchasing. Instagram allows businesses to host a shopfront via the built-in e-commerce feature in the app.

Instagram has a 33 per cent return on investment (ROI) rate for in-app e-commerce purchases followed by Facebook at 25 per cent, YouTube at 18 per cent and TikTok at 12 per cent. For successful e-commerce ROI on social media, brand credibility needs to be established first. This can be done by creating a regular posting schedule using a mixture of organic and paid content.   

Put your plans into action!

Effective EOFY marketing strategies should aim to create excitement, and urgency as well as reinforce customer relationships around the end of the financial year. This will allow your business to enter the next financial year with increased finances, lower merchandise numbers and updated data for marketing plans and future strategies.  

There are many strategies available to your business, which can be cheap, quick, and easy to implement – and effective in generating sales. The most important thing is to plan your strategy and implement it – and the perfect time to do that is now!

The post Finish the financial year with a bang! EOFY marketing strategy planning to boost your sales appeared first on Inside Small Business.

Check your claims

Having a good understanding of the kinds of expenses you can claim as tax deductions has the potential to cut your tax bill, potentially more than you may think.

Small-business owners can claim running expenses as deductions on their income tax returns like rent and utilities, office expenses, staffing costs and expenses for marketing, insurance, travel and training.

“If your business has any of these expenses and you’re not claiming them as tax deductions, you’re leaving money on the table,” Scott Bailey, Senior Director and Head of Tax Accounting at ITP Accounting Professionals, says.

Small businesses can also claim capital expenses as tax deductions. Capital expenses include either the purchase cost of a depreciating asset or any expenses incurred during the transportation or installation of the asset.

Depreciating assets are items like machinery, EFTPOS machines, motor vehicles, furniture, computers and mobile phones which have a limited life expectancy and decline in value as they get older.

Consider pre-paying some expenses

ITP Accounting Professionals say one of the biggest misconceptions about tax time is that small-business owners do not appreciate some of the legal strategies that can help reduce their tax bill.

One common strategy is to pre-pay expenses like rent, insurance, website domain registration fees or website subscriptions before the end of the financial year to reduce your business’s taxable income for the current year.

Before you prepay expenses, ITP Accounting Professionals says you should consider the potential implication on your business’ cashflow and only pre-pay expenses that are genuinely needed for the business.

Check if you are eligible for other incentives

This year, there have been changes to some of the rules around tax incentives introduced to help assist businesses during the height of the COVID-19 pandemic.

Temporary full expensing was introduced to help encourage business investment and applies to businesses with an aggregated turnover of less than $5 billion.

Businesses can claim an immediate tax deduction for the business portion of the cost of eligible new depreciating assets that were first held and first used or installed and ready for use for a taxable purpose after 6 October 2020 until 30 June 2023.

Your small business may also qualify for the Small Business Income Tax Offset Grant which offers tax offsets of up to $1000 a year for unincorporated small businesses.

The Australian Tax Office (ATO) will determine the offset based on your business income.

Other top tips from the tax experts include:

• While 30 June officially marks the end of the financial year, your business tax return must be filed by 31 October or may extend to 15 May if you work with a registered tax agent.

• Make sure you keep good records. Many tax deductions are left unclaimed because of missing paperwork. The ATO also requires all individuals and small-business owners to keep records as proof of their tax claims.

• Get ready for next year now. Consider setting up a system on a spreadsheet, app or specialised software to keep all your financial records in one place.

With just a little bit of planning and extra insight, the end of the financial year does not have to be such a taxing time for your small business.

NB: The advice above is general. It is advisable to consult a registered tax professional regarding your specific tax situation.

The post How to make EOFY less stressful for your small business appeared first on Inside Small Business.