Whether you’re a small business owner, a sole trader or working nine to five, getting ready for the end of financial year can be an arduous task. Here are YBI’s top tips.
Tax time can stressful but planning ahead can put you in good stead. A little hard work now can set you up for the next financial year and ensure when it comes time to lodge your return you’ll be in tip top shape.
Write off bad debts
Late payments are crippling many Australian small businesses, so the end of financial year provides an opportunity for you to write off bad debts thereby cutting your tax bill. In order to write off a debt the debt needs to have been accrued in the same financial year. You can write off the whole of a debt or a portion. If you have extremely overdue invoices and their payment is looking unlikely it’s worth considering writing them off.
Get your profit and loss statement ready
Your profit and loss statement record your sales and expenses for the year. It’s a summary of the money you have coming in (income) and your outgoings (expenses). Don’t forget to include items such as accountant fees, insurance, utilities, rent and bank fees and charges. Also remember to note whether these expenses are GST inclusive.
What about deductions?
When you’re running a business there are some obvious deductions you can claim that will minimise your tax debt. Have you built a website to promote your business? Are you doing any marketing? These costs are claimable expenses. What about travel? Do you attend conferences? Do you use your vehicle for work? If so, the portion of your motor vehicle expenses that are attributable to work can be claimed. Does your work require you to wear a uniform? How about special safety gear? Tools of trade: also claimable.
If you are a sole trader, the ATO’s mydeductions tool can help you to record your business income and expenses during the year.
Use a registered tax agent
Check your tax agent is registered with the Tax Practitioners Board (TPB). The ATO recommends you always use a TPB accredited agent. They keep up to date with the tax changes, can prepare and return your form for you. There are other benefits to lodging with a TPB too, such as the ability to delay lodgement by up to 12 months. Using a tax agent also allows you to keep up with any changes in the law such as new deductions you can claim .
Watch out for scams
Cybercriminals love tax time. It provides them with ideal conditions to prey upon unsuspecting businesses. For this reason, there is often a rise in BEC (business email communication) scams requesting payment for tax debts or threatening legal action or jail time. Be wary if you receive an email or phone call professing to be from the ATO demanding immediate payment and requesting your credit or debit card details. The ATO will never call you to ask for this information, nor will they threaten to arrest you.
Read more about scams targeting business and how you can protect your business here.