5 Essential Things Every Small Business Owner Must Know for EOFY

It’s getting so close to EOFY and I’m getting excited! Not only for Tax Time 2016 but for the refresh that happens for all small businesses when the financial year rolls over. It’s a fresh start for another year to kick their financial goals. It’s a great time to review and take stock of what has happened in the last financial year. This time of the year is also a great opportunity to get ready for your tax returns and possibility minimize tax. So this year I bring you the 5 essential things you just have to know for EOFY: 1. $20,000 immediate deduction.This was announced in last years budget and many businesses have taken advantage of it. It means if you buy an asset, anything up to $20,000 (but not over), you can immediately write if off in your books. Normally for an asset of this size it must be deprecated over a number of years, delaying the deduction. One of the most common questions I get about this one is whether its one limit of $20,000, and the answer is no. You can go and buy three assets of $20,000 each and still deduction all three. You must however ensure you have the cash flow to spend, and I encourage anyone considering it to discuss with your accountant first. 2. Tax Cuts for Small BusinessAn announcement must in this years budget was the reduction of the company tax rate from to 27.5% from 1 July 2016, with it decreasing further for the next 10 years. The budget also saw unincorporated businesses get a tax cut in the form of a tax discount, which will increase from 8% to 16% in the next ten years as well. This means it’s a great time to be in business. The rate of tax you will pay as a business will decrease consistency every year for ten years. This encourages businesses to grow and become the biggest employer in Australia. 3. Minimize taxDo you know what you can claim? Deductions are the easiest way to reduce the amount of tax payable, but they come with a criteria. Every industry is different and the easiest way to find out what to claim is to discuss with your accountant. EOFY is a great time to maximize your deductions by reviewing your expenses and spending some money if cash flow allows. Examples include; new tools, new computer equipment, memberships, subscriptions, training or seminars. If you have excess profit to reduce review if there is any expenses you can bring forward into this financial year. 4. Get preparedReviewing your financial information at EOFY will highlight some important tasks you might need to complete. For example, do you need to do a stock take? Write off some bad debts? Review insurance policies? Or pay superannuation for employees? Completing these things will help you prepare for your tax return and minimize your tax. 5. Get organisedIs your record keeping working for you? Do you dread getting organised and ready for your tax returns? Maybe it’s time to review how your records are kept. Cloud accounting offers some great advancements in record keeping and can help take the stress out of your business. 6. Tax scamsBonus tip! EOFY is also a great time for tax scams, or just scams in general. Please be mindful of this as scammers target small business owners and often succeed. Examples of ones we know about: ATO will not email you about a tax refund, ATO will not call you for your bank details, you don’t always need private health insurance to save tax, and many more. Scams are always evolving so be on guard. If you have any questions get in contact today so you will be ready for EOFY