Why not make a new financial year resolution for your business as of 1 July? We are always full of ideas as to how to make our businesses better, but when things get chaotic it’s easy to put changes aside and to become stuck in our current routines. Here is a list of our top resolutions and tax tips that your small business should aim to implement in the new financial year.
Maintain your financial records
This has got to be one of the most important things a business can do! Not only do accurate records give you a good indication of the financial performance of your business, but it’s also a legal requirement to keep them for five years. So this financial year, aim to stay on top of your records and keep them up to date. This will make it easier to complete your activity statement obligations and prepare your annual income tax and fringe benefits tax returns. Accurate records also help with managing your cash flow, debtors, and creditors more effectively, and clearly outline your business’ financial position to banks and other institutions.
Donate to charities
Your business can claim a tax deduction for any donations the business makes to charity. In order to make a tax deductible donation, the donation or gift must be made to a Deductible Gift Recipient (DGR). All monetary donations can be claimed up to the full amount; however, all other types of donations will be subject to various valuation rules. Not only does donating to charity give back to the community, but it will also promote goodwill for your business.
Think tax-smart when organising staff events
Parties and staff events fall into the category of ‘entertainment benefits’ and as such these expenses will incur FBT, unless they are specifically exempt or determined to be a ‘minor benefit’. A minor benefit is one that is provided to an employee on an infrequent or irregular basis and the cost is less than $300 inclusive of GST per employee. Expenses such as food and drink for employees are exempt from FBT, but no tax deduction or GST credit can be claimed.
Pay on time
In the new financial year, aim to pay everything on time. Make sure any debts to the ATO are paid on time to avoid late fees and interest penalties – this money could be much better spent being re-invested back into your business. Also, don’t forget to pay superannuation payments on time. If you’re feeling particularly savvy, you could also pay the final quarter’s superannuation payments early in order to reap the benefits of the deduction a year early. Make a concerted effort to avoid all late fees, and prevent debts from building up next financial year – your liquidity ratio will thank you for it.
If you have any more questions about small business tax, or any other accounting related question, please do not hesitate to contact the experienced team of accountants, tax agents, and tax lawyers here at The Quinn Group. Call +61 2 9223 9166 to make an appointment, or submit an online enquiry at www.quinns.com.au.