Tax time can be daunting and stressful for business owners, but there are key ways to help take the pain out of the end of the financial year.
We ask experts to name the top hacks that can save businesses money and time, and make the most of efficiency, staff and tax deductions.
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Identify equipment needs and make some purchases
Michelle Le Roux, Private Clients partner at PwC explains that recent changes to tax rates mean that more businesses will now enjoy not only a lower company tax rate but also the instant asset write-off.
“That is helpful for some of our clients when they're looking to improve their assets and modernise some of their computer equipment,” Le Roux says.
“Clients can look at whether they need more computer equipment and software equipment, and whether it's worthwhile buying them now.” - Review your structure and people needs
This is a perfect time of year to think about your employees and your business goals, says Le Roux.
“The month leading up to the 30th of June is a time when we start thinking about the year ahead, and we ask clients: What does the next 30th of June look like for you? What are your key objectives? Do you have any special projects you might be looking to undertake? Are your structures appropriate for your plans for the upcoming year?
“It is a very good time to take stock and ensure that the business has the right people to undertake those new plans, and also that its structure is appropriate for FY20.”
And once you’ve identified your staffing needs for 2020, think about where you can save money and time in the recruitment processes. A great option for this could be purchase job ads in bulk for the roles you’re hoping to fill throughout the year. On SEEK for example, when you purchase multiple ads at once, you can save up to 29% on the total cost.
- Maximise efficiency through automation
Automating tasks wherever possible is a huge time-saver, says Dale Dixon, Head of Product at MYOB.
“The best way to get efficient is to automate,” he says.
“If you invest in the right software for your business requirements you can ensure many time-consuming tasks, such as expenses and payroll, are automated during the year, relieving time pressure at the end of the financial year.
“Using a cloud-based accounting solution enables your accountant or bookkeeper access to your files so they can work with you in real time, saving time for both of you.”
Dixon says there are many processes that can be automated, saving businesses time and money. For example:
- Create a budget for the next financial year that will help you stay on top of things
- Connect your software to your bank, and reduce time on your bank reconciliation
- Explore online payment options for your customers
- Setup automatically generated invoice reminders to save you time in following up overdue invoices
- Capture your receipts and link them to your transactions. “No more hunting around for receipts next financial year,” Dixon says.
- Tell staff about bonuses
While reviewing staff, it’s worth taking a look at their performance for the current year and working out whether any employees might be eligible for bonuses, says Le Roux.
A tax deduction is available for bonuses when a company recognises that it has an obligation to pay that bonus to its employees, she says. But in order to claim that deduction this financial year, you need to make sure you tell employees before June 30 that they have qualified for a bonus, even if the payment happens in the next financial year.
- Pay super up until June 30
Don’t forget to pay employees’ superannuation up until the end of June.
“In order to be eligible to claim a deduction for superannuation, the superannuation fund actually needs to have received the superannuation contribution by 30th of June,” Le Roux says.
- Don’t forget to make donations
If your business regularly donates to charity, don’t forget that donations made before 30 June to charities that qualify as “Deductible Gift Recipients” should be eligible for a tax deduction for the current financial year.
For PwC’s clients, “It is time to look at meeting their philanthropic goals for the year”, Le Roux says.
“Often clients are looking at their results for the year and working out whether they want to make donations to charity. Paying those donations before 30th of June to charities who qualify as “Deductible Gift Recipients” enables them to be tax deductible.”
- Take stock of bad debts and inventory
If you have bad debts that can never be recovered, you will only be eligible for a tax deduction if that debt is formally written off, Le Roux says.
And if you have inventory that’s no longer saleable and needs to be scrapped, an evaluation of this should be made at June 30 to make that claim, she says.
- Don’t forget about trusts and loans
Businesses that have a trust within their structure need to decide how that income will be distributed, and make that resolution before June 30, Le Roux says. And businesses that have made loans to shareholders might be subject to provisions - called Division 7A - that require payments to be made by June 30.
