End of financial year – some tax time tips for small businesses

The countdown has begun to the end of financial year. Businesses big and small will be scrambling to get their financials in order – to pay that last invoice, chase that last payment and to ensure that the books are all in ship shape for end of financial year reporting.
In the midst of all the reconciliation, businesses will also be keen to do what they can to reduce their tax obligations. Keep these ideas at top of mind as to-dos before 30 June:

1. Make superannuation payments early – businesses can claim a deduction for superannuation that is paid before the end of the financial year. Even if quarterly superannuation payments aren’t due until July, you can take advantage of deductions in this tax year if you pay them early. Be mindful of requirements set out by individual super companies on when payments need to be handed in for them to qualify as a payment received in this fiscal year.
2. Get rid of obsolete equipment – check your asset register and scrap any obsolete machinery or plant equipment. You can take advantage of a write-off deduction for scrapped equipment as long as you write-off the equipment before the end of the financial year.
3. Write off bad debt – have a look at your outstanding invoices, do some date back as far as the previous tax year? It’s time to physically write it off in the books, this way you can claim back the GST credits on that debt.
4. Conduct a stocktake – take an inventory of your stock to identify slow moving and unsaleable stock, these should also be written off before 30 June.

Meanwhile, get on top of your bookkeeping and start to compile as much paper work as possible in preparation for reconciliation. This includes bank statements, payable, receivables and inventory. For business owners that look after their own books, you can start running reports from 1 July to provide to your tax advisor or accountant. Time is critical as a number of statements and instalments fall due at various times throughout the month of July.

Tax deduction for equipment rental with Flexirent

If you rent or lease equipment for business, you may be entitled to a tax deduction for your monthly payments. Because your organisation doesn’t own the asset but is paying for its use, these payments can be classified as operating expenses all of which may be claimed in the current fiscal year. Meanwhile, if you were to purchase your assets and own them, you would be required to claim your deduction by depreciating the asset over time – usually through the duration of its useful life. The immediate deduction on monthly rental payments in this financial year means that you can reduce the amount of assessable income within your business and subsequently, your tax obligations right away.

Planning ahead for the next financial year

If you’ve scrapped equipment or written off assets that have become obsolete, commercial leasing could be a great way to get new equipment for the next fiscal year. Leasing is a great way to keep up to date with new technology and ensure your business operations stay up to date.
Find out more about the benefits of commercial leasing for your business with Flexirent.