It is essential to consider planning strategies as we enter the final quarters of this financial year. Tax planning assists you in implementing valuable strategies for tax minimization. Tax Planning sessions are a great way to address future planning, cashflow management and preparing for tax liabilities. At MJJ Accounting we can provide you with a review of where your business is at and present strategies to ensure the most effective outcome for your business. If you are interested in booking in a tax planning session with us, please contact the office by phone or email to arrange.
Entering a new financial year is a great time to reset your current finances while establishing systems to help you keep on top of your income, expenses and tax obligations. Is it important to have a plan and revise what options are going to be best suited for you and your business. Consideration such as:
- Bringing forward necessary expenditure to the current financial year can be an effective strategy to reduce your tax liability sooner.
- Consider deferring income until after 30 June if possible, giving consideration to cashflow implications.
- Ensure any bad debts that won’t be collected are written off before 30 June
- Pay your employer super contributions on behalf of your employees before 30 June to obtain a tax deduction in the current year.
Small Business Tips
Instant Asset Write-Off
Take advantage of the instant asset write-off. This allows businesses to claim an immediate tax deduction on what would otherwise be a depreciating asset. It is important to discuss this your accountant as it may cause a tax bill in future years when you sell the asset, as you will have claimed the full deduction this financial year. The Instant Asset Write-Off (or Temporary Full Expensing rules) ends on 30 June 2023.
Performing a stock take and accounting for the value of your trading stock will ensure you account for any stock loss, damaged or obsolete items to ensure you aren’t paying too much tax. Advantages of stocktake also include improving cashflow, detecting gaps and theft and is a great time to review pricing strategies.
Write-off Bad Debts
Businesses can only obtain income tax deductions for bad debts where various conditions are met. Review your debtors and write off any unrecoverable debts. These debts will come off your income in the year in which you write them off, regardless of the year you invoiced them.
Timing of Expenses
Expenses are only deductible when incurred, i.e. there must be a presently existing liability to pay the expense. We suggest following up contractors and suppliers for all invoices to ensure they are recorded in your accounting software to ensure you obtain the tax deduction in the correct tax year.
Making contributions to superannuation can be an effective strategy for reducing tax, however, it is important you seek financial advice to ensure this is the best overall financial strategy for you before proceeding.