Another financial year is almost over, where did it go? How was the year for you, good, bad or downright ugly? With just a few days to the end of the year, it may be too late to have a chat with your accountant to do some tax planning unless you already have, but there’s still time to take action on a few things.
My five tips when the end of the year is this close are:
Check your profit and loss statement
First of all, you need to know whether you’ve made a profit for the year or not, and how much that profit is. It’s worth having a good look at each line in the profit and loss making sure it makes sense and nothing looks out of place. One way to do this is to compare this years’ figures against last years and look for the anomalies.
The profit showing in your profit and loss statement may not be the figure that you will pay tax on. There may be adjustments which your accountant makes that will impact the final figure.
This is particularly the case if you report income on a cash basis for tax purposes. You will need to calculate the change in debtors and creditors from last year to this. Then apply that to the profit to calculate your estimated taxable profit.
So yes, your taxable income can be more than your profit. Equally it could be less.
Pay superannuation contributions to get the tax deduction
You must pay your superannuation contributions before 30 June in order for them to be deductible. The ATO requires you to pay within 28 days of the end of each quarter. However, some employment awards require payment monthly.
So, whilst the April to June quarter (or June monthly) contributions aren’t due for payment until 28 July in order to get a tax deduction it has to actually be paid and received by the superannuation funds by 30 June.
With the ATO providing immediate tax write off for assets purchased before 30 June up to a cost of $ 150,000, you’ve still got time to do a bit of shopping if you need a tax write off.
The deduction for motor vehicle purchases is limited to a maximum of $ 57,581.
If you need a new computer, printer, perhaps a new webcam, or an ergonomic desk chair, you’ve got a few days left to buy and get a 100% tax deduction in the current financial year.
The ATO has extended the write off to 31 December, so the benefit will continue to be available for the start of the new year. The motor vehicle limit increases then to $ 59,136.
However, be sensible about this and only buy if you need the item. It may be more prudent to save your cash for the upcoming months.
It’s too late to make any significant impact on your expenses so close to the end of the year, but it’s a good time to take a good hard look at them and determine whether any can be eliminated or reduced for the next financial year.
This is one way to set yourself up for success for the next year. I continue to find costs to reduce or eliminate even though I check my numbers regularly. If you’re not looking at this regularly, the chances are you’ll find savings which will give a boost to the start of the next year.
Set your financial goals for next year and map out your cash flow
The end of one financial year means the beginning of the next one and time to review what worked, what didn’t work, what could be improved, and ultimately what your goals are for the next year.
Your goals may be a revenue target, a profit target or a pay increase for yourself. Put your goals in writing and create a budget to work from.
And importantly, map out a cash flow plan for the next six months.
Don’t just let another financial year roll by without considering a few steps to take to get you the best result you can for this year and set yourself up for the next.