Tax planning for your small business is something you should always be thinking about. And don’t just think about tax planning as a way of claiming more tax deductions, it’s also a really effective way to clean up your business operations ready for a new financial year. And with financial year-end almost here, there are some really important questions that you should cover off.
1. Are you on top of your unpaid invoices?
It’s important to review your unpaid invoices (debtors list) as small businesses can claim a deduction for old debts which are not recoverable.
2. About to do some year-end invoices?
Unless you are a sole trader operating on a cash basis, generally income is assessable when an invoice is issued. This means you might want to hold off invoicing clients until July so that it is taxable in the next financial year.
3. Still have some old equipment on the books?
It’s important to review your list of assets as small businesses can claim a deduction for the remaining value of any asset which is no longer used.
4. Have you organised a stocktake?
If your business carries stock (for example if you are a retail business), then a stocktake is generally required to be done before year-end. During your stocktake, identify unsaleable and damaged stock as, if disposed or gifted to charities, these are able to be written-off and claimed as a tax deduction.
5. Need to update some of your equipment?
Small businesses can claim a deduction for the entire purchase price (up to $1,000), rather than having the deduction spread over several years. So purchasing new equipment now means you can get a tax deduction this financial year.
