Thinking about tax may be as interesting as waiting in line at the bank (or anywhere really), but ignoring it until the eleventh hour could be costing your business.
You need a strategy other than 'just tell me when I have to pay my next bill' and, once you get in the taxation groove (yes, there is such thing), you can start to see the results on your bottom line.
"Everyone's happy to renegotiate their monthly phone plan and save $50 but if you compare that to some time invested in understanding tax and ways you can minimise tax, it's a lot bigger bang for your buck to save some money," Megan Faraday-Bensley, Director, Business Services and Taxation from Prosperity Advisers, told The Huffington Post Australia.
"Tax can often be one of the biggest expenses of a small business. And so while no one particularly enjoys it, that's often because they don't understand it."
Faraday-Bensley concedes many small business owners can be a little lax when it comes to maximising their tax benefits, but says those who keep putting it off shouldn't panic.
"Getting advice at some point is better than never starting the process," she said. "A planned approach is always better, but it's never too late."
Here, Faraday-Bensley offers four top tax tips to help small business owners keep more of their hard earned cash out of the ATO's coffers.
1. Pay it forward
Bringing forward any known business expenses into this financial year can make a difference, says Faraday-Bensley.
"I never encourage people to spend money to save tax because you are better off to pay 30 cents in the dollar rather than waste a dollar," she said. "But if they are known expenses in the coming month for the business then bringing them forward and paying them before June 30 can give you a deduction."
There are some pre-payment rules so it's always best to check these with your accountant.
Faraday-Bensley also encouraged small businesses with annual turnover of less than $2 million to take advantage of the current tax break for assets purchased under $20,000 being eligible for an immediate depreciation write-off.
Small business can do this before June 2017, although depending on the result of the election and upcoming legislation, businesses with turnover between $2 and $10 million may also soon be eligible for this.
2. Count your stuff
If your business sells products and not just services, Faraday-Bensley says a pre-June 30 stocktake is in order.
"Often tax returns will be done down the track and contemplation of what the stock might have been is a bit unknown after the event," she said.
"But doing a stocktake on June 30 can deliver benefits of writing off any old stock in the business that no longer has resale value."
So if you know you won't be able to sell those four dozen pairs of stirrup pants or those boxes of Human Centipede DVDs, then they are obsolete stock and there's no point hanging on to them.
3. Paying your super is superb
Topping up your own superannuation and that of your employees on time each quarter as dictated by the ATO is vital.
If you have employees you must pay the super guarantee -- the minimum amount of super -- each quarter. As a self-employed individual, you can make your own contributions which are tax deductible.
But Faraday-Bensley advises to fast track payments to before June 30.
"For employees' super, while the superannuation guarantee is only due by the 28th day following a quarter, for the June quarter that amount isn't deductible if it's paid in July," she said. "So paying that June quarter super on or before June 30 beings that expense forward to the current year."
4. Bad payers begone
Got a client who just won't pay? It's time to stop pining for them and break free.
"Review receivables for debtors in the business to write off any bad debts," she said.
"Obviously the better outcome is to collect it, but if the debt is not recoverable -- if you are not going to collect it in the future -- you would write it off as an expense in the business."
The tax buck doesn't stop here
Faraday-Bensley says July 1 is a great time to review your tax habits, your processes and strategies for the coming year. She says setting goals and focusing on your budget and cashflow is imperative to a smooth-running business.
She says startup owners are more than willing to adopt new technologies, including cloud accounting -- and encourages all her clients to climb aboard the change wagon.
"More than ever we are seeing people adopting change, so I am seeing less people do what they have done in the past just because they have done it in the past," she said.Suggest a correction