It is almost that time of year again, here our some top tips to help you end the financial year on a high.
1. Take advantage of the Governments $30k small business tax incentive. Recent changes have upped the governments small business tax incentive program from $25k to $30k which can cut the total cost of buying new assets by up to a third. Businesses with revenues less than $50m are now eligible meaning most companies now have access to this but we find that a lot of people don’t actually know how it works. Here’s a simple example to help explain.
Scenario: Profitable business buys a trailer for $30,000 on June 30th
1. The is eligible for a GST refund of up to $2,727.27
2. The net amount of the asset ($27,272.72) is shown on the profit and loss as an expense
3. Because of the big expense, net profit is reduced by $27,272.72
4. Having lower net profit results in a tax saving of up to $7,500
From the example, buying a new asset up to $30k can give you up to $10,227 in total tax benefits!! In this case, the net cost to the business for the new $30,000 trailer is less than $20,000. This is a great opportunity and should be used to help manage your tax.
2. Start thinking about your tax position now. If you haven’t already, go to your accountant or bookkeeper and ask them for your profit and loss for the year so far. Have a look at it, try and understand it and then make a plan around your tax. There’s lots of things you can do now to manage your profitability and tax. After June 30, it’s too late.
3. Remember, you need to balance your profitability as well as your tax. All too often we see businesses trying to manage their tax obligations and they do it poorly. Sure, they may have managed their tax but their profitability is all gone, along with their ability to get finance to fund the growth of their business. When you’re tax planning, don’t forget to focus on profitability also. That’s why the government tax incentive is so good, because the finance companies can ‘add it back’ meaning it lowers your tax while not affecting your ability to finance.
4. Get ready for growth. June is a great time of year with the cash flow issues that come from Christmas, all the public holidays in the first few months and income tax obligations out of the way. This is the start of a clear run through to Christmas where there’s not too many business interruptions and only 2 BAS payments due between now and March 202. Make the most of it! Gear up for growth. If you’re thinking of growing do it now to maximise the time of year with the least cash flow headwinds.
5. Finally, off the back of the Royal Commission into finance we’re hearing a lot of reports of people struggling to get things like credit cards, personal loans and of course home loans. We don’t do any of that style of consumer lending but we do here it’s causing a lot of problems for a lot of people. If you’re thinking of needed any style of personal loan, as a business owner you might have issues. Talk to your accountant about how they can best move some income from the business to your personal name so on the off chance you want a $1,000 personal credit card you don’t get thrown out of the bank with a big DECLINED!
If you need some small business advice, want to discuss your finance options or want to know more about Chevron Equipment Finance, please call us on 1800 334 345 or email firstname.lastname@example.org