If you're in Australian business, you are no doubt hyper-aware that financial year end is fast approaching on 30 June. Strike that; forget business, if you're breathing you will have been bombarded with EOFY sales for cars, electronics and the like. I know that Sydney television and radio has been in full-assault mode. Putting that cacophony of noise aside, I want to give you two big tips for year end.
There are any number of other accountants who will provide you with very valuable reminders on financial year end tax tips, so I won't reinvent the wheel there. What I do want to do is place two things front and centre in your mind as 30 June approaches in a week's time.
#1 Capture this opportunity to recap and reset goals
As we frantically try to close sales before year end, close out the books and shore up our records to complete our tax returns, it's easy to lose sight of the big picture. I honestly believe that this time of year is one of the under-appreciated opportunities to get the business together, recap on the year that has gone by and to recalibrate our goals for the year ahead.
Whilst Christmas time and January is often considered as the time for reflection and growth by many business leaders, that approach has the natural disadvantage of many members of staff being absent on holidays, in addition to a general drop in motivation levels after a long year. Meanwhile, July represents a time when most of the team is present and frankly, with the winter months hitting, they will welcome a reset and boost to morale that comes through a reflection and recalibration exercise.
Don't underestimate the benefits to your business that can come with a fresh start to the financial year by strategically planning and ensuring that the entire business is on the same page. Own Your Mark can assist with guiding these types of strategy sessions - get in touch to discuss.
#2 Prepay necessary costs NOW
In every business we have those projects that are always sitting on the back-burner. You know the type of things I'm referring to:
That website refresh
An overdue review of processes, policies and procedures
A re-imagination of our brand identity and logo, from that tired concept we kicked off with five years ago
Development of a fresh marketing strategy to push an area of our business that is lagging
Most financial year end tax advice centres around pushing you to purchase assets that can be written off - cars, computers, machinery etc. That advice is entirely valid, however not entirely applicable for every business.
However, I'd argue that almost every business has some type of project along the lines of the brief examples outlined above, that has been languishing in the depths of your mind or a tired to-do list. We know these things need to happen and we intend to do them soon, however we are presented with a dual-edged opportunity to make NOW that time to act.
Not only are so many of us driven by some deadline-based impetus, but there is an added financial benefit here of a tax deduction that can be brought forward into this year's tax return for the business.
Of course, you should always obtain independent tax advice specific to your circumstances, but general guidance from the Australian Taxation Office supports the idea of capturing prepayments at year end. Specifically, "if you are a small business entity... you can claim an immediate deduction ... for prepaid expenditure if the payment is incurred for an eligible service period not exceeding 12 months and the eligible service period ends in the next income year."
In other words, if you approach a professional to have some work done and pay for it before 30 June, it may indeed be eligible for immediate deductibility even if the payment relates partly to services that will be rendered after 1 July.
Now is the time to get that new website, strategy session, logo or financial consulting work kicked off. As always I am contactable should you want to discuss your options.