Top Business Tax Tips for EOFY

The government requires all businesses to prepare for tax time. This period comes with many, often confusing and most importantly every changing rules, and the taxes of a small business and a sole trader may vary.

That said, the end-of-year tax period doesn’t have to be overwhelming. We’ve collected the best business tax tips EOFY to help your business prepare for government requirements and the next financial year.

5 Business Tax Tips: Getting Ready for the EOFY

Small businesses can be required to present many things when tax time comes. Tax planning can thus be tedious and often require professional advice.

Disclaimer: This article is of generic nature and is not intended as financial advice. Make sure you seek out professional advise from a tax professional if required. 

These are the best business tax tips for EOFY for small business owners to help make tax time easier.

1. Keep Your Records Updated

Ensure all your records are up-to-date. While paper records can help you, it’s best to utilise technology for record-keeping to help you view your financial position and eligible assets.

This will also allow you to calculate depreciation expense claims better.

You’re required by law to keep the following records for five years:

• Expense invoices
• Bank statements
• Credit card statements
• Employee records (contracts, wages, etc.)
• Vehicle records
• List of debtors and creditors
• Sales receipts
• Asset purchases

Stay updated with tax law in case of changes since these can easily adjust your tax rates. You wouldn’t want to end up paying for the wrong tax bracket.

You’d also want to update personal contributions such as superannuation that can affect your tax return.

2. Learn How Business Expenses Affect Tax Deduction

Your business’s big purchases can entitle you to temporary full expensing. This gives you a deduction based on when you spend money on a business asset in its first year of installation.

That can be a beneficial time to leverage small business loans from lenders like Lumi. Depending on your situation and circumstances they could make you eligible for tax benefits such as an instant asset write-off.

3. Review Your Business and Marketing Plans

This is the best time for small businesses to assess their tax year and how they can increase their business income.

By reviewing your plans, you can figure out how to improve your company and seize opportunities as your business grows.

4. Watch Out For Tax Scams and Aids

You must work with a registered tax agent while filing your taxes.

Verify their status with the Tax Practitioners’ Board by searching for their TPB registration. They should also have the registered tax practitioner symbol on their documents.

Tax season is also a time when scammers pop up. You might receive calls or messages regarding the following scams:

• Tax Owed Scams: a message claiming you underpaid your taxes and need to repay them immediately.
• Tax Refund Scams: a message claiming you overpaid your taxes and can get a refund.

Both scams would likely ask for your credit or debit card details. Some may even ask for additional fees and transfer costs.

Only interact with authorised people to help you with your taxes.

5. Update Your Insurance Policies

Read through all the documents for your insurance coverage, and don’t assume it’s automatic for your business.

Small Business Checklist for EOFY

Note the following while preparing your requirements for your tax deductions.

• Review Capital Expenditure: Check where your business spends its money and ensure it has the things you need to maximise tax deductions, especially with an instant asset write-off.
• Small Business CGT Concessions: See if your business is qualified for capital gains tax (CGT) concessions applicable to taxpayers with businesses assets less than A$6 million or an aggregated turnover of less than A$2 million.
• Quarterly Super: You need to pay your Super Guarantee (SG) contributions by 30 June to qualify for the deductions of that financial year. Have your superannuation paid before 20 June to qualify for these deductions.
• Defer Income: You can delay your tax payments for assessable income so that payments won’t be taxed until the following year. Defer your invoices until after 30 June.
• Contact ATO: If you think your business will struggle to meet your tax obligations, you can contact the ATO to adjust how your payments will go.
• Stocktake: Your slow-moving or damaged stock should be identified and disposed of by 30 June for income purposes and to receive a deduction. Minimise your on-hand stock by the end of the financial year.
• Bad Debts: Rules about bad debts can get complicated, so it’s best to ask for professional advice regarding which debts you could potentially write off.
• Family Trusts: These should also be filed and distributed by 30 June.
• Yearly Reports or Returns for Different Tax Types: This can include fringe benefits tax (FBT), pay-as-you-go (PAYG) withholding, and services tax (GST).

How Are Business Tax Preparations for EOFY Different?

Unlike other taxation processes, this marks the end of a financial year, which can affect how your business moves forward.

It considers your whole business, from its expenses to its income for the whole tax year.

While business tax tips for EOFY can significantly help, seeking professional advice on preparing your tax return is always beneficial. 

Importance of Business Tax Compliance and Tax Regulations

All businesses must file for a tax deduction and pay necessary taxes to the Australian Taxation Office (ATO).

Failure to do so can result in additional fees and even the closure of your business.

Most businesses may prefer hiring experts to ensure everything is ready for tax time. However, you can quickly learn more about business tax tips for EOFY to help make things easier.

FAQs

You may have more questions about business tax tips for EOFY and how you can better prepare for them.

We’ve answered the most common ones.

How Do Business Loans Help With My Tax Deductions?

Loans technically don’t fall under taxable income because you would need to repay the lender for that capital. They can sometimes be considered a tax liability. 

Instead, taking out a loan from Lumi can help you claim an immediate deduction for fees and interest charges associated with them.

You can also consider the asset purchases that help you claim deductions. These are considered business assets and can be eligible for business deductions.

These usually depend on the loan type (Lumi has several) and how much you take out. It’s best to consult a registered tax professional.

How Do I Know If I’m Eligible For a Tax Deduction or Concessions?

Expenses directly related to your business structure and operations make you eligible.

These are some of the most common examples of assets for allowable deduction:

• Uses tools, machinery, computers
• Uses diesel fuel
• Has travel or motor vehicle expenses
• Has a working website
• Operates from home

Conclusion

All business taxpayers need to know about tax changes and how they can benefit from tax returns.

The business tax tips for EOFY we’ve provided are just a few of the many ways you can make the most out of tax time.