The 2018-2019 tax year is well under way. Small business owners know that cash flow is often a major worry and stress. Living on tight margins, every penny counts. So make sure you aren’t paying more tax than you need to!
Here are our top 9 Tax Saving Hacks to help you kick start the new financial year.
1. Instant Write Off
Staying around for another year is the Instant Write Off for any business assets that are under $20,000. Normally you would need to depreciate these items over a number of years, but for at least the rest of this financial year you will be able to write these off immediately. This can be used for both new and used items and can include computers, software, machinery and even a car!
2. Get into the cloud
Cloud accounting software tools can save you time and money. Cloud software is highly collaborative and can allow you to be on top of your accounting. You can also generate some pretty fancy reporting to ensure you can track your performance with the click of a button.
3. Check your GST
Make sure you check what you have actually paid GST on when it comes to claiming it. Not all expenses accrue GST so when entering them into your accounting software you need to make sure you are only claiming GST on items you have actually paid it on.
4. Review your client list
This might seem counter intuitive, but sometimes you might have clients that cause you time and money in unnecessary ways. Clients that are unreliable in paying their bills can hold up the progress of other jobs. So take the time once a year to review your clients, and be brave enough to let some go if they are holding your business back and aren’t a good fit.
5. Review your reporting
Running a small business is time consuming and often we spend most of our time working for our clients. But it is important to review your financial reporting and understand exactly how the business is performing. By doing this at least monthly you will catch costly mistakes or issues early before they do more damage.
6. Share Files
Forget the manual folders of receipts and dropping off the shoe box to the accountant. Allow your accountant to access the necessary files online. You can do this through your cloud accounting software, or alternatively you can set up a Dropbox where you can scan and load the documents and receipts that your accountant can access. The ATO also has an app that you can download onto your phone to help you with records, log book and receipts.
Nothing beats a face to face discussion. Make sure that you are sitting down with your accountant at least twice a year. This allows you to make decisions and changes before the end of the tax year. Having someone look over the business financial health is important and will also help you make clearer decisions.
8. Balance the loans
If you have a private company structure and a director has taken a ‘loan’ from the business it must be paid back by the end of the financial year. If it isn’t paid back by 30 June then you may be subject to tax implications. If the loans are not otherwise deductible then you may need to repay the loan or clear the loan by declaring additional wages or dividends.
9. Don’t overpay tax
In order to not pay more tax than you need to, make sure you have reviewed any small expenses that you might have paid on your personal credit card and ensure that you have included them in your business expenses. Talk to your accountant throughout the year to ensure that you are reducing your tax where you can and record keeping is essential to substantiate your deductions.
If you are concerned about your tax make sure you contact one of our tax advisors.