As the end of the Australian financial year approaches, now is a good time for a bit of financial housekeeping. The earlier you take control of your finances, the more time you will have for chasing owed payments and smart tax planning.
CashManager software can organise all your finances throughout the year making it easy when it comes to this dreaded time. We have even compiled a checklist to make the next two months’ financial housekeeping pain-free and beneficial to your business.
Work with your accountant
Your accountant or bookkeeper will have a full understanding of your business finances so now is the time to get in touch to discuss what you need to do. Your accountant will also be able to ensure you are complying with all payroll regulation and keep you updated with any changes.
Check the details
Now is a good time to make sure your payroll is up to date with all the correct employee information. Do the same with your suppliers, customers and lenders. This will help when chasing up any owed payments.
Maximise Deductions
Bring forward any deductible expenses such as repairs. If you can prepay monthly outgoings such as rent, utilities or wages, take advantage of this. If you need to purchase any equipment or assets, do so now to claim depreciation.
Write off bad debt
Your accounting software can generate a cashflow statement so you have full transparency over your debt and how much money you are owed. If there are debts that you know will not be paid before the end of the tax year, you can write them off as bad debt in which the outstanding balance is removed. The tax is then adjusted accordingly. Bad debts have to be physically written off before 30 June, and it is important to exhaust all means of recovery before writing them off.
Superannuation and bonuses
Check that you have made your employee superannuation contributions, including the June quarter for it to be tax deductible this financial year. The Federal Government’s SuperStream programme requires all businesses to make super contributions in a standard data set. Remember the inclusion of tax on any employee bonuses. If you are planning bonuses for later in the year, you can include them in this years’ tax, as long as there is a recorded notification informing employees of their future bonus.
Take advantage of the $20,000 tax deduction scheme
Until 30 June 2017, businesses turning over less than $2 million annually, can take advantage of the $20,000 tax deduction scheme. Businesses or sole traders can purchase business items outright and then get the money back for the item as a right-off. This is only applicable to physical items purchased after 12 May 2015 and under $20,000. Single purchases that cost more than $20,00 do not qualify for the immediate tax break, but they can be deducted over time.
Write off any old stock
You are required to do a stock take of your products at cost price excluding GST. If you are holding damaged or unused stock valued lower than the cost price, they could be costing you in tax deductions. Write off any obsolete stock or value it at a lower market value to reduce your tax bill.
Review your goals
Your accounting software can produce profit and loss sheets to identify where your business did well, and where there is room for improvement. Goal setting is only beneficial with a regular review of your progress. You should be checking your goals quarterly to make sure you are on track. If you are failing to meet your targets, now is a good time to assess whether they are unachievable or whether you have not been productive in achieving them.