The financial year always wraps up on 30 June, so it’s vital you know – in advance – whether you need to claim more or less expenses. Why? Because depending on which side of that date your expenses fall on, will impact where your taxable income sits. So before you go out and purchase a new computer or work vehicle, don’t forget about regular or annual expenses, such as: superannuation payments, dividends, director’s fees and bonuses. You need to know how those items stack up before you spend more this financial year – otherwise you might tilt your balance sheet too far in the opposite direction.
If you need to claim more, move onto tip #2 below; if you don’t, then close your purse and skip down to tip #3. If you don’t know either way, then you need to chat with me or my team today!
If you’re sure you need to claim more expenses this financial year, then it’s time to make use of those bad debts and fixed assets. But before you take a rubber to your bad debts and wipe them out, make sure you’ve explored the best options for them first. These sorts of expense transactions are an effective way to offset your taxable income as well as get some use out of those registered assets you’re not using anymore! Keep in mind through, this kind of paperwork can’t be done in the 11th hour, so you need to make sure you’ve sorted it all out well and truly before the EOFY.
Here’s another vital piece to the EOFY puzzle: should you continue invoicing as much as you can, or should you defer income until next financial year? The answer to that is closely connected to what you want your overall financial position to look like – meaning, where will you sit on the tax scale after you weigh up income, expenses, assets, liabilities, and your goals? For some, there may be benefits to hoarding more income this financial year, while others will realize greater gains by deferring (eg. not invoicing until 1 July). If you’re not sure, pick up the phone and ring 1300 135 918 to find out.
Whatever amount of stock your business is holding come midnight 30 June, the ATO will lump into your asset column. So, depending on what your situation is for the above three tips, getting this part wrong can really mess up the end game, which is to minimise your tax bill. Simply put, if you don’t know your stock holdings, you can’t work the figures out, which means you can’t put the odds in your favour.
Regardless of your financial position right now, there will be another EOFY looming its head around the corner next year. So why wait to start planning how to best utilise the system for your benefit? Why spend all your time back-peddling to try and capture savings? It’s time to forward plan, so you know exactly what steps you’re going to take – leading to the future you want to head towards!
If you have the time to nail these five tips, year in and year out, then I applaud you – you’re going to be in great financial shape! But if you’re too busy running your business to take advantage of these tips; don’t worry, you’re not alone and we can definitely help!
It only takes an easy discussion, with me or my team, to work out what your goals are and how we can get you there. I think your future is worth careful consideration, wouldn’t you agree? I look forward to chatting with you soon on 1300 135 918.