As a business owner, there is a lot on your plate. With June 30 just around the corner, this will mark the end of another financial year so it's an important time to review how your business has performed and consider whether there are any last minute things you can do to improve your position.
Let’s take a look at some areas you should be considering PRIOR TO 30 June.
Profit & Loss Review
Look for any expenses that may have been missed. Assess current profitability prior to any year end adjustments to calculate a ballpark figure for any potential tax payable.
Superannuation
If you are wanting to include any deductions for contributions prior to 30 June, Xero has recommended that these are processed by 14 June 2022 to allow time to process through the clearing house. Also, please be aware of the mandatory increase to Super Guarantee to 10.5% beginning 1 July 2022 as well as the requirement to pay all employees including those that earnt less than $450 per month.
Instant Asset Write-Off
The $150,000 instant asset write off provides business with an immediate asset write-off on items that previously would have been depreciated over several years. The item needs to be purchased and used in the year the write off is claimed. This applies to assets that are financed, but it's important to note that the standard ATO limits and threshholds apply to motor vehicles. So if your business is in need of some equipment, it might be an idea to purchase it before 30th June to reduce your current year tax bill.
Bad debts
Review your accounts receivable report. Chase up those late payers AGAIN! If the debt is deemed unrecoverable, then the debt can be written off as an expense.
Stock take and stock write off
Your favourite activity right?! Time to do a stock take and assess what you hold verse what your inventory management system believes you hold. Determine if any stock is obsolete or not able to be sold.
Prepay Expenses
Similar to above, if you know you are going to be buying something in the next 3 months, consider buying it before 30th June (don't buy stuff you wouldn't have otherwise). If your business is looking like it will make a profit in this current financial year and you've got the cash available, consider paying your Superannuation (which isn't due until 28th July) before 30th June. You may also find some other expenses that you can pay in advance to get the tax deduction in this current year.
Review your Director’s Loans
Ensure your minimum div 7a loan repayments are made via cash or dividend.
Trust Distribution Minutes
The ATO is cracking down hard on some areas of trust distributions, specifically through S100A. Ensure your arrangement is compliant. Ensure that you have a good understanding of likely accounting and tax profits to distribute as well as the types of income to be distributed.
Donations
If you have been thinking about making a donation, now could be a good time to do so. Ensuring that the entity is on the deductible gift recipient list, you can make a donation which will be 100% tax deductible. Our preferred recipient is Effective Altruism Australia based on the evidence at 80000hrs.org.
POST 30 JUNE
Single Touch Payroll
Your wages reconciliations will need to be completed and lodged by 14th July 2022. If you need assistance with this, please get in touch with us.
June BAS’s
These will need to be completed and lodged by 28th July 2022.
Superannuation
If you choose to pay on the regular schedule, these will need to be paid by the 28th July 2022.
Taxable Payments Annual Reports (TPAR)
If you are one of the lucky business owners that is required to complete a taxable payment annual report, this is due by 28th August
2022.
Once again, please get in touch with us if you need assistance. The list of industries that are required to complete a TPAR is here.
BEYOND COMPLIANCE
The start of the new financial year is also a great time to assess what has been going well, what needs improvement, overall business strategy, business model, opportunities and risks. Don’t forget to stop and think about the progress you have made so far. Gratitude for everything you have created is a key part of the journey.
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