7 great EOFY tips for entrepreneurs

For innovative entrepreneurs preparing for the end of the financial year (EOFY), it may be seen as a time that could be better spent doing more exciting business transactions or coming up with revolutionary new products and services. However it is extremely important to get your tax return completed promptly and accurately and the following EOFY tips will help focus the mind on several key areas you cannot afford to forget. As with any financial dealings linked to your tax return it is important to seek specialist advice from experienced tax agents and accountants in the Brisbane and Cairns region.

1. Overseas investments and currencies

For those entrepreneurs who deal on a global scale, and let’s face it with the power of the internet, it is far easier these days to do business internationally than ever before. Many will be dealing in different currencies and adding overseas investments to their portfolio. If you deal in currency for hedging and other purposes, or have put money into overseas investments, then now is the time to set out and declare all your financial interests. The ATO do have the resources and the time at their fingertips to track down any undeclared offshore investments and the consequences of not disclosing money, are extremely severe.

2. Company bonuses and bad debts

Any bonuses to executives or employees can be brought forward and written down but they have to be minuted and confirmed by 30th June, the same goes for bad debts and you need to document debts written off along with evidence that you have chased them up.

3. Superannuation

If June 30th falls on a Sunday then you need to start booking some dates in your calendar, because first of all if you want to add more to your superannuation accounts you need to do this before that date. The ATO is very strict on anyone seen making an excess contribution, so get any additional funds in before 30th June and make sure it does not go over the $25,000 limit. You also need to be cautious if you’re paying yourself a pension from self-managed superannuation funds. Check with your tax accountant that you are paying yourself the minimum (if you underpay by one twelfth you will probably be alright and not subject to an extra charge fee but your tax agent will need to advise you on this).

4. Shareholder payments

Payments or loans you make to shareholders or associates could be taxed as unfranked dividends under the Division 7A laws. You have to ensure that these loans are dealt with by the EOFY and a minimum amount of payment from the shareholder has to be made. Loan balance at 30th June have the potential to be treated as a dividend so talk to your tax accountant and ensure the Division 7A laws are followed to the letter.

5. Pre-pay your expenses and maximise your deductions

Check all the expenses you pay out and try to prepay as much as you can so you can claim these as deductible items; for example annual membership or subscription fees, interest rates on loans and so on. Review the depreciation on assets owned and get this down as a tax deduction.

6. Finalise all trust documentations and payments

If you are running your business as a trust then make sure you get all your trust distribution plans completed before 30th June including any payments or allowances made to trustees and don’t leave it till the last minute.

7. Mandatory reporting for building and construction entrepreneurs

Finally, this tip relates to those in the building and construction sector because last year a mandatory reporting of every single payment made to contractors was introduced. Companies now have to report these to the ATO who will be looking at these records and documentation so ensure if this applies to your industry sector that you have them all sorted and ready to file.

The Income Tax Professionals in Queensland is well-equipped to manage all your business taxation needs with a professionally trained team of tax consultants and agents, drawing from an organisation that has been in business for more than 35 years. You can discuss your tax return and tax related affairs with ITP throughout the year, without charge. Click here for more information.

Tips on how you can expand your business

For many businesses there comes a time when you are ready to expand, whether you are relatively new to business or a seasoned professional, this is still a big undertaking and one that needs careful planning before going ahead. One of the first things to do is to sit down and make a financial plan considering how you are going to manage your cash flow, apply for commercial finance and set out your strategy for growth.

Making a financial plan

Putting everything down on paper is very helpful because you can set out in black and white how you are going to achieve expansion, so a good plan will contain the following elements:

• Product plan

• Operational plan

• Separate marketing and sales plans dealing with competitors and customers

This will set out over the next 3-5 years your predicted profit and loss statements and what changes need to happen to ensure you meet your goal. It will drive your financial dealings including reviewing how to finance this expansion, whether commercial loans, private investors also known as “business angels”, franchising your operation and so on.

Consider buying the office

Up until now you may have had to work from home or rented office premises, so consider using commercial finance to buy a property. Not only will you have invested in a fixed asset that increases the value of your organisation but you will no longer be paying rent and getting no return for your money.

Diversify

Speak with your current clients and ensure you understand not just their current needs but their future requirements. Then offer additional products and services linked to your existing portfolio, which will address their needs and bring in new custom. This could be investing in new manufacturing equipment or additional staff but this is where the right commercial finance will help.

Target new markets

If your work is mainly with residential customers, explore the commercial field and target possible openings for your product or service. Use links with existing business networks along with social media for free advertising, to market your offer to a whole new set of clients. Review your advertising campaign to target industry publications, promote special introductory offers to entice new consumers and then showcase your high quality service and products.

Review the franchising option

This is not for everyone but it is one of the fastest ways to increase not just the market but your investment as others open companies or shops under your name but you are not responsible for the micromanagement of their operation. If this is part of your financial plan, then ensure you factor in the commercial finance costs of using a franchise solicitor, as this will be a necessity if you go down this route.

Form a partnership or alliance

If you have explored the opportunities open to you and you find that another company has the client base you want access to, then consider forming an alliance with that organisation. You will also have to bring something to the table they want, but if between you there is a one stop shop offer to clients, then this is worth considering. Use commercial loans to finance any marketing or rebranding of products and services, set out any legal agreements, expansion plans and so on.

These are some of the top tips to consider when reviewing expansion plans for your business, but remember the key is in planning and speaking to the experts in commercial finance, because they will have the experience to help you every step of the way. Finance 48 is best-placed to advice your business if you are looking to expand. Their commercial finance service ensures you receive unique personalised service that are tailored to your specific expansion needs. Click here for more information.

What are small business tax deductible items?

Most of the costs that are incurred when running a small business can be claimed as deductible items in order to reduce the amount of income that will be assessed. The rules do vary depending on the business structure you are operating under along with the nature of the expense involved so it is important you check out your tax return with your tax accountant or agents of which there are several in the Brisbane, Cairns and Gold Coast area.

What is important is that any expense incurred has to be directly related to earning assessable income, before it is claimed as a deduction. Your tax accountant will also be able to advise you of the limits on the amount that can be claimed for specific expenses. It is also worth noting that if you are claiming for items that you use for both personal and business use, such as a car for example, then you can only claim a deduction when you are using it for business purposes. If you only use an item for certain parts of the year for work purposes, then again you will have to restrict your claim to the time period that it was used for work.

Otherwise, the common deductible items for a small business can be divided into three areas:
• running expenses
• staff related deductions
• premises or assets bought or used

Running expenses

There are a number of deductible items that are linked to running a small business, however it is important to note that some of them, such as establishment costs and legal fees for example, can be deducted over time and some deducted immediately. You will need to check with your tax agents when preparing your tax return 2014 which ones have a time frame attached to them. As well as the normal fees and bills associated with running a building, such as fuel bills, council rates and fees, telephone bills, office expenses and stationery, you will need to make a list and account for other costs as well. Any licenses or registrations that you need to operate, public liability insurance, banking fees, accountancy and bookkeeping costs can also be deducted. If you are paying interest rates on a business loan or bank fees and charges, then this should be offset against the cost of running the business as well.

If you run a business vehicle then travel costs can be claimed back along with costs for trucks, cars and other vehicle charges including maintenance and fuel. You can also deduct money for advertising and marketing costs and stock and materials and if you are paying out for income protection insurance, then this too is a deductible item.

Staff related deductions

There are a number of deductible items that come under the heading of worker-related and this applies to contracted or sub-contracted hire, as well as the wages or salary of your employees. Costs linked to recruiting staff and labour hire fees can be deducted, along with any staff training you have paid for or charges for professional fees or registrations. Superannuation guarantee contributions are deductible, along with any work related allowances, commissions or performance bonuses you pay out. If you provide tools or uniforms then you need to put this down as a deduction and you are able to claim a small amount of money for laundry costs. If you provide any fringe benefits for your staff then again this can be deductible but it is always best to check with a tax accountant before submitting these as part of your tax return.

Premises or assets bought or used

These are very tangible items and often the ones that people are most comfortable claiming against their tax return because it includes items of equipment such as computers as well as the rental amount or leasing costs of the building they are operating from. However, if you run a home office, which many small or micro business owners do, you can claim for expenses associated with this as well.

It is also important not to forget those items linked to the assets you own or lease such as computer hardware and any software or operating software you have to buy. Again any insurances linked to maintaining these items can be deductible, along with services and repairs. Fees linked to any business loans also come under this heading as does the depreciation of cars, trucks, plant and equipment and your tax accountant will be able to advise you how to work out this costing.

Finally, it is worth remembering to keep and record all your expenditure in date order and clearly numbered along with receipts, service logs and insurance documentation so that you have evidence to back up your claims, and consulting with an experienced tax professional will ensure you maximise the deductible items on your 2014 tax return.

If you do not want to leave anything to chance when it comes to your business tax, look up The Income Tax Professionals (ITP) in Queensland. They have been in the business for over 35 years providing unique, quick, reliable and affordably priced service to assist you in all your business taxation needs. Click here for more information.