It’s that time of year where you need to get organised to ensure tax time for your business is a smooth, pain-free process.
Founder & CEO of Minnik Integrated Financial Solutions, Leah Oliver talks about what you can do now to ensure you are well prepared.
- Review & Reconcile
Before you start planning, forecasting, and applying tax minimisation strategies, you must ensure that you have a reliable set of financials to work from.
Keeping consistently reconciled reliable records makes it easier to manage your ATO compliance matters, and to collate the information your accountant requires to prepare your year-end financials and tax returns.
When reviewing your records, there are a few basic things you should undertake:
- Reconcile all Bank & Credit Card Accounts
- Review Debtors Aged Report & Process Corrections
- Review Creditors Aged Report & Process Corrections
- Assess Stock Balance Compared to Physical Stock Count
- Ensure Fixed Asset purchases are Correctly Reflected on the Balance Sheet
- Ensure Loans and Finance are Correctly Reflected on the Balance Sheet
- Attend to Outstanding Tax Liabilities
- Reconcile GST & PAYG Withholding Accounts
- Reconcile Superannuation Payable
- Review and Address Director / Shareholder Loans
- Locate Missing Receipts, or Acquire Copies From Suppliers
Your Balance Sheet is critical in identifying potential cash flow problems. Your Profit and Loss is key in assessing the annual performance of your business.
We recommend using XERO to manage your financial records for the following reasons:
- XERO will significantly reduce the time you spend on admin and bookkeeping so you have more time to focus on growing your business.
- XERO enables you to produce accurate, reliable financials and thereby make better business decisions.
- XERO presents shared, live, and up-to-date data to your accountant and professional advisor, who is consistently working with you on the success of your venture.
If you are not currently using XERO, year-end is the time to make the conversion. Transition is most efficient at this time of year. Talk to us and embrace XERO! We guarantee you won’t look back.
- Organise Your Records
At the end of the financial year you need to gather essential records and documents for your accountant to prepare year end for your business. These include:
- Your XERO file clean and reconciled
- Bank statements to support reconciled bank and card accounts
- Identified unrecoverable debtors to be written off
- Stock take and identified obsolete stock to be written off
- Employees payroll and superannuation records
- Substantiation for material asset purchases
- New lease or finance agreements
- Outlined change of circumstances affecting your business
Reviewing these areas before 30 June may highlight some key action points that can dealt with before the year closes.
- Collate Receipts
Still rummaging through crammed shoe boxes of receipts and invoices? If you have to flick through countless documents for details of year end expenses, you are wasting precious time you could be spending doing revenue generating work.
XERO is your game changer when it comes to managing the books, and if you wish you can use an App such as Receipt Bank for receipt management. Alternatively, implement a simple filing system to support your XERO file.
Using this combination of systems makes it easy to share live information with your accountant and advisor both during and at the end of financial year, and in the event of an ATO audit, the data is ready to present.
All businesses are required to keep records for 5 years in either electronic or paper form.
- Minimise Tax
Decisions based purely on minimising tax are not always good for your business, or any other investment. Primarily we focus on growth and capital return. A useful tax break here and there can certainly help to fast track wealth accumulation.
Tax planning is a year by year process and ideally should be done at the start of the financial year rather than at the end. There are a number of actions you can take to save tax in the lead up to end of financial year, but more importantly to have you ready for maximising your tax savings in the new year.
Examples include super contributions, staff bonuses, prepay expenses, bringing forward planned purchases, or deferring income – to name a few. It may be time to sell investments, or alternatively hold on to them. The tax position of beneficiaries could do with a review, for tax effective family trust distributions.
The asset write-off scheme continues for small business in 2017. For some businesses spending before the end of the financial year can help minimise your tax. The scheme allows small businesses to immediately write-off the full value of an asset purchased under $20,000, it can be used multiple times, and can effectively reduce the tax liability of a business in the current year.
Spending decisions are dependent on availability of cash flow. We advise you to seek personalised advice from your accountant on whether your planned business expense qualifies the rules of the scheme, and whether spending commitments are a wise decision for your business at this point in time.
Talk to us if you would like to receive a copy of our 2017 Tax Minimisation Checklist, to assist in your tax planning.
- Review Your Business Structure
What about your current business structure? Is it serving you, your family, and your unique circumstances? Are your assets and investments protected? Are you paying too much tax?
Financial year end is the most ideal time to restructure your business. Minimal fuss, maximum efficiency, a brand new start.
If these questions resonate with you, be sure to discuss your business structure with your accountant and professional advisor, to consider a potentially more effective structure.
Significant tax savings are made by our customers every year, because their business structure was setup correctly from the start. In addition, they can sleep at night having the peace of mind that their hard-earned assets are well protected – including the family home.
At the other extreme, if your mindset is entrepreneurial – you may have a very complex structure that is not supporting your goals. It may be time to simplify. Freeing up your time and energy for new activities.
Leah Oliver and the team at Minnik Integrated Financial Solutions are passionate about assisting you and your family to achieve financial security and freedom. Contact us today to understand how we can assist you to minimise your tax, and establish, grow and maximise your wealth position.