End of Financial Year Tax Planning – what you need to know
Well it’s fast approaching that time of the year again!
End of financial year.
While there are some businesses who are on top of their books and paperwork – ready for year end – the majority though will not be ready.
Typically, we see a mad rush to locate expense receipts, access bank statements, super contribution records, payroll sheets, insurance certificates etc.
And in fairness, it can be an overwhelming time of the year – after all – no one wants to get on the wrong side of the ATO!
However, with a little planning, forward thinking and prisonisation, it need not be a frustrating time that always seems to chew into late nights and family time.
Here’s what you need to know and do for financial year end planning.
Start organising your financial records
This is first and foremost.
It will involve downloading your online account statements and gathering all your personal income records into one place.
A good practice is to store your receipts for any tax-deductible regulatory (payroll tax, super, insurance etc), payments for the year in a separate folder sorted by month (not is a shoe box!).
Then, when tax time comes, You don’t have to go searching for all this information.
And if you know you have a refund coming, file your return early so you can use the money.
You may also consider making an extra deductible contribution into super – talk with your accountant first though.
Organising financial records can be streamlined and painless by using a cloud accounting system.
Review your expenses for the past year for future monthly spending
The better handle you have on your spending habits, the better you can plan your saving and make needed changes in order to save more.
And if you’ve been using a cloud-based accounting system, then all your records will be in place, categorised, sorted and up to date.
Make a list of all recurring debt you carry.
Try to make more than the minimum payments on any consumer debt to reduce the amount subject to interest.
Ask the lender for a lower rate if you have been paying on time.
During this review, you may also want to consider other sources for capital for your business.
Check to see your superannuation contributions and how much you can still contribute
If you make this move early enough, you may still be able to increase your salary deductions in order to make up for any shortfall below the maximum.
Not only that, but it is generally more efficient to use the extra cash to re-balance your portfolio when you do not have any losses to off-set.
From a broader financial planning perspective, now is a good time to consider the following:
Is your Insurance Coverage still adequate?
Make sure you have adequate life, health, disability, long-term care, and homeowner’s insurance, all of which can help protect you from a financial calamity.
Review your Estate Planning documents
Examine your wills, trusts, etc. to make sure they reflect your recent wishes and desires. You never know when they will go into effect.
Review your Financial Plan
Last and by no means least, check to see if you need to make any adjustments based on changes in your circumstances.
If you do not have a plan, now would be a really good time to put one together.
And finally, the following areas may require you to sit down with your accountant to review in more detail:
SME’s that operate as a Pty Ltd to plan for dividend distribution before end of financial year to fix up Division 7A problems.
Businesses that deal with trading stock need to make sure a stock take and making right choice of its valuation method.
Dealing with bad debts.
Looking into any prepayment options to see if that will help
Bringing forward or deferring income
Are you aware off all your reporting obligations and have all things in place?
Aperture Accounting can help you stay on track throughout the year and avoid the last-minute panic and hassle of organising your records for year end.
We’d be more than happy to review where you are today and how next year can be a smoother ride in terms of planning and preparation.
To find out more, call Aperture Accounting on 1300 APERTURE or 1300 273 788.