- It’s a simple one but remember to incur all legitimate expenses before 30 June. If cash flow allows, make a list of any equipment you intend to buy and purchase it before EOFY. That includes work vehicles, new computers, tools, office equipment or other items related to your business. See our article in this newsletter on changes to the instant asset write-off for small business for details.
- Manage your cash flow and how much you will pay tax on this year. This strategy depends on what you are trying to achieve. If you are a sole trader or microbusiness looking to reduce your tax payable for this year, you might be able to delay invoicing until July 1. If you are a business looking to maximise deductions, then make sure all invoices are received and paid by June 30.
- Consider prepaying any expenses upfront such as rent, insurance, market research or service contracts up to twelve months in advance.
- Pay super: Make sure you pay your staff all their super and yourself too by EOFY. Many business owners often forget about planning for their own retirement. Think like an employee and put aside at least 9.5% of your income to pay into a super fund. And if you have the cash available, make use of the concessional super contribution scheme, which allows you to add another $25,000 this year. See our article in this newsletter on the important superannuation changes.
- Is your business in the most tax effective structure? With the recent company tax changes, you might want to consider if it’s worth changing the structure of your business. While protecting your assets and having appropriate insurance is important, trading via a company or trust might be worthwhile if you earn more than $150,000 in profits. Find out more in our company tax rate article in this newsletter.