With 30 June 2013 just behind us, here are some strategies that you may find useful in preparation for 30 June 2014.
For most small business owners, the end of the financial year calls for a review of their operations – this is not exclusively reserved to plan for tax strategies but also to identify cash flow requirements. Small businesses, defined as having a turnover of less than $2 million, normally account for their income and expenditure on a cash basis.
For this reason, it is essential to optimise your tax for the coming year end, ensuring that you won’t be faced with significant problems with your cash flow. This is particularly important when you have deferred income to be realised during this financial year.
To optimise your strategy on tax planning, consider the following:
- Bad debts should be written off in your Book of Accounts before 30 June.
- Employer and/or self-employed superannuation contributions should be paid, or received by 30 June. (Be caution and ensure superannuation payments are within the Superannuation Contribution limit.)
- Ensure prepaid expenses are claimed up to 12 months in advance.
- Ensure that related parties (a spouse or family member) are paid wages which reflect a ‘reasonable income’ for the work that they had performed.
- Fixed assets subject to depreciation should be installed before 30 June if you intend to claim for depreciation.
- Trading stock should be carefully reviewed and, ensure that you identify obsolete stock that needs to be written off.