Top tips for small businesses leading up to EOFY

Top tips for small businesses leading up to End of Financial Year (EOFY)

Sydney, 25 June 2013 – While the recent federal budget failed to provide adequate relief for Australia’s small business sector, there were changes made to tax rules and superannuation contributions which should have small businesses taking note before the end of the financial year.

This ten-point checklist from Gary Green, National Sales Director, Bibby Financial Services, outlines how businesses can review their tax position and set up strategies in the new financial year.

1. Tax benefits for small business
If your turnover is less than $2 million, then you’ll be eligible for certain tax concessions. Changes to depreciation rules from 1 July 2013, include the instant asset write-off threshold, which will increase to $6,500 from $1,000. It’s a good idea to regularly check if your business is eligible for this or any other small business tax concessions so you can gain the benefits.

2. Change in employer super contributions
The compulsory Superannuation Guarantee will increase to 9.25% from 9% from 1 July 2013 and the current age limit will no longer apply, meaning employers must make payments for employees who are 70 years or older. Make sure your payroll systems accommodate these changes.

3. Don’t wait for unpaid invoices
Dun & Bradstreet’s latest Trade Payments Analysis (TPA) showed that businesses, on average, are waiting up to 55 days to receive payment on invoices. If you’re still chasing invoices from the last financial year, now it’s time to write them off. Bad debts are tax deductible and can be used to offset your taxable income.

4. Bring forward expenses
If you can bring forward some business expenses into this financial year, these can be used as deductions and help to offset your taxable income, potentially reducing your tax bill in 2012-13. But be aware that no deduction for an expense is allowed for this year if payment is made after 30 June.

5. Medical Expenses Tax Offset
The recent Federal Budget announced that the Medical Expenses Tax Offset is to be phased out, so if you have spent over $2000 on medical expenses the time to claim is now. Disability or aged care expenses can be claimed until 2019.

6. Lodge your documents on time
Get your tax documents in on time; otherwise you could be hit with a fine known as a failure to lodge on time (FTL) penalty. This may be applied where you are required to lodge a return, statement or other document such as a Business Activity Statement with the ATO by a particular date.

7. Get your business in order
Administration can be a tedious task but doing it regularly will aid you at the end of financial year. To help organise your documents and records, think about investing in electronic accounting software. This will reduce errors and free up your time to concentrate on growing your business instead of doing paper work.

8. Need a new lender?
If cash flow is an issue for you, look into alternative forms of financing. Debtor finance, also known as factoring, can pay up to 85% of outstanding invoices usually within 24 hours and follow up the debtor for you. According to the Debtor and Invoice Finance Association (DIFA) total debtor finance turnover was up by 2.1% in the March quarter from last year, outpacing business credit. If everyone else is doing it, why aren’t you?

9. Don’t rush your return
Don’t leave your tax return to the last minute. Start it now so you can get a more accurate picture of the health of your business ahead in the next financial year. Make sure you have all the relevant transactional records on hand needed to complete your return so you can hand them to your accountant. If you don’t have receipts to back up your expenses, then you can’t claim them as deductions.

10. Consider a revitalised market strategy
Use the new financial year as an excuse to review the progress of your business and marketing strategy. Consider dabbling in social media to increase engagement with your target audiences or listen to the conversations they are having on Twitter, Facebook or Linkedin. Bibby’s recent Barometer found almost half of small businesses are using social media to raise brand awareness and source new customers, whilst 40% are using it to generate new sales and 44% to provide networking opportunities, effectively contributing to business growth. It’s time to get on board!!

ENDS

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