Are you planning to party once June 30 rolls around, your business tax return completed for another year? The finance records reconciled, the receipts neatly filed, and tax obligations are out of the way (for now).
I love a party as much as the next person, but if you make rash decisions on expenses and revenue in the final lead-up to June 30 or during July celebrations, you could end up with an EOFY hangover.
Beware of the temptation to buy ‘unnecessary stuff’:
Some organisations turn EOFY into a major sales event. Aggressively promoting June-30 offers, with “time is running out” and you should “EOFYEverything.” These are clever marketing strategies to encourage businesses to buy unnecessary ‘stuff’ for the sake of lowering company profit.
Businesses can sometimes use tax incentives to buy equipment they need or need at a later date. However, this doesn’t mean that business owners should blow their EOFY budgets on things they want vs what they truly need!
The EOFY Rush:
Many business owners fall into a common pitfall around June: agreeing to bill their clients before they do any work – even though accepting payments ahead means inflating profits or potentially experiencing larger tax bills.The best way to prevent these situations from happening? Always consult with your accountant if you’re considering billing early, and ensure the profits and tax implications carry over into the new financial year correctly.
Hey big spender:
We’ve all been there. Your business has surplus cash in the new financial year and, knowing you have plenty of time before your next tax bill is due, you splurge on an extravagant new office fit-out in the first week of the fiscal year. Or maybe a grand event for staff to boost morale.
Once money leaves the company, it’s taxable. Don’t spend large chunks of cash because you can – talk to your accountant and develop a plan for the next 12 months (and beyond). With the correct planning, you could end up with a bigger ‘spending’ budget than you initially thought was possible and maximise the associated tax deductions.
The time to plan for June 30th, 2023, is July 1st. By collaborating with the expert accountants at the start of the financial year to plan your income, likely tax position, company outcomes and future strategy. Establish automated finance operating systems to save time and money, and meet your accountant more often to review your performance.
Read More: Don’t Miss Out On Tax Deduction Opportunities With Super In 2022
Proactive tax and cash flow planning is the best approach you can have for your business and your peace of mind.
If you follow our advice during the year, you won’t need to let off steam at an EOFY party. Or if you do, you & your team can really party – knowing your business financial position is up to date and tax compliant.