It seems like just yesterday we were all in the grips of dealing with tax in the heart of a global pandemic. But EOFY is creeping up on us yet again. So, how can you ensure you’re organised?
It’s been a strange financial year, there’s no doubt about that. Big corporations and small businesses alike had to close their physical doors for a large portion of it. Some offices are still in the ‘staggered’ phase of return and even chose to embrace a fully remote working model. Other businesses, meanwhile, had no option but to be customer-facing – after all, there’s only so much you can do remotely!
But what does this all mean for the end of the financial year?
Well, to put it simply, there are some things you should already be doing to get things in order, so you’re fully prepared when tax time rolls around…
1. Understand where you’re at
As EOFY creeps up, it’s always a good idea to take stock of what’s going on for you financially. Review your financial position with your bookkeeper or accountant – it could be that it’d be beneficial to invest now to recoup a benefit this financial year. Hopefully, as the year has gone along, you’ve been keeping a record of everything so the information is readily available.
2. What you can and can’t claim
There are lots of expenses you can claim, but be careful to check what you can’t. Most business expenses can be claimed as long as they relate to earning your income.
- Website set-up or maintenance
- Motor vehicle expenses (as long as the vehicle is used for business purposes)
- Home office expenses, such as internet and mobile
- Software or hardware expenses
- Business loans
Importantly, you must have records and receipts to prove the purchases.
3. Check your records
There are a number of tasks you need to do throughout the year – make sure they’re done before tax time rolls around. Having all of this up to date makes it easier to lodge any tax forms or returns, as the hard work has already been done.
Yearly tasks may include:
- Profit and loss statement
- Records of debtors and creditors
- Lodgement of yearly reports or returns for PAYG withholding, fringe benefits tax and GST
Make a digital record of any paper records you have, and back everything up.
4. Engage a good tax accountant
There are benefits to working with an accountant all year. For example, if you do, there won’t be any surprises for them when you start to discuss filing your tax, and they can help you get an understanding of everything along the way. If you haven’t already, engage an accountant who can help you with your tax. Make sure they’re registered with the Tax Practitioners Board by searching the tax register.
5. Reduce your taxable income
EOFY sales happen every year. Not only are retailers trying to get rid of stock so products are on sale, but businesses can also take advantage of any instant asset write-offs. There are rules around instant asset write-offs – and this is, of course, is where your accountant can help. Generally, businesses are able to acquire assets to build the business and reduce their taxable profits at the same time. Many businesses choose to purchase vehicles, hardware such as computers, cash registers or security systems – so if you’ve been thinking about investing in an asset for your business, now’s the time to do it. Of course, if you need some additional capital to make the purchase, that’s where Bizcap can help!
The type of tax return you file depends on the structure of your business, which is also why having an accountant can help. If you keep a handle on all of your records throughout the year, it makes tax time a lot easier to deal with. And with EOFY right around the corner, it’s time to get everything in order.
If you’re thinking of investing in your business and need some capital, talk to a Bizcap lending specialist today. Remember, business finance is tax deductible too!