It seems like only yesterday that we were last blogging about being ready for tax time, but actually it was a year ago, and here we are once again, staring down the barrel of the financial year end!
So make this the year that you really get yourself organised to minimise tax and save some money.
Being organised falls into 2 broad categories – here are 6 tips for each that should make a difference!
Last Minute Stuff
- Go through your debtors (people who owe you money). If you’re sure they are a bad debt and will never pay you, write them off now. This removes income and will reduce your tax bill.
- Get ready to count your stock at 31 March if you think you have more than $5,000 in value – this could go either way in terms of savings – but it is a legal requirement.
- Go through your list of assets (fixed asset register) and make sure that you have, and are using, every asset listed. It often happens that you have old stuff on there that is long gone. Write it off now and take the tax deduction.
- Make sure that you are carefully recording all your creditors (people that you owe money to). Recording all your liabilities accurately can reduce your tax bill.
- Think about asset purchases pre year end. This doesn’t make an enormous difference to your profit and subsequent tax as you can only claim one month’s depreciation – but if you were planning on buying something anyway, you may as well take that extra month into the year.
- Get a good accountant, one that will help with your tax planning!
Preparing for Next Year – Another 6 Crucial Tips!
- Get a good accountant. Tax planning is much better done at the start of the year than the end and it can make a substantial difference to your tax bill. Do not underestimate the difference to your overall tax position that an accountant can deliver.
For example, consider a plumber who works as a sole trader. His wife keeps the books and answers the phone. He makes a profit of $90,000 and should pay tax of $20,620. If he operated out of a company with his wife as a shareholder, this could be reduced to $16,940. That’s a big difference #holidayinFiji
- Get a decent accounting system. The year end is an ideal time to switch to a good online accounting system. We talked about this a lot in the last blog, insert link, but it will save you money and time, and can help you run your business better. You will be amazed how easy it is and wonder why you left it so long!
- Check that you need all the entities and tax structures that you have. The beginning of a new year is a great time to consider whether you need 2 companies and 3 trusts, maybe you don’t. Discuss with your professional advisors and shut down any that you don’t need. Although there is some short term cost to close things down, it is well worth it to stop ongoing compliance cost.
- Think about re-pricing your products or services. Do a competitive analysis and see what everyone else is charging. Even if you decide to hold your prices, it’s a valuable exercise – and what you find may surprise you!
- There’s a huge amount of new business software available every day – is there anything you can automate anything to save money? Do some research online, talk to friends and look at what others are doing, there might be something helpful for you.
- Survey your customers! Always good to check in on the most important people in your business. Ask them how they’re doing, what they like and what they don’t like. Make sure you are on the right track.
If you’re unsure about how to implement any of these tips or want to talk them through with someone, contact us at firstname.lastname@example.org