How can you save more money during the financial year? Let’s start afresh to save on those tax filings.
Small business owners everywhere cannot avoid one thing at the end of every year. It’s an inevitable part of doing business or going through a career. The end of financial year will always account all of our finances whether we like it or not. Fortunately, there are certain hacks you can do to lessen your expenses during tax season and for you to save a lot of money.
It will all start with how you manage your money, expenses and deductibles. Here’s what small business owners have to say when it comes to lessening the impact of taxes on them during the financial year.
1. Be Good Friends With An Accountant
It’s not easy to catch up to all the information regarding income tax, expenses and deductions. Therefore, it’s best to seek out an accountant that can help demystify all these terms and concepts for you. Having an accountant to guide you in making the most out of your money during EOFY can save your business loads of money. Get a trusted accountant for help and advice when it comes to end of financial year matters.
2. For Large Expenses
You can get bigger savings when you purchase big-ticket items at the near end of the financial year. EOFY is the perfect time to buy a new car, as manufacturers will slash prices by that time. This can also benefit buyers who want to improve their tax return. However, be aware of those deals that promise a 0% interest, as sellers may actually charge other fees that make the total price of the car higher than usual.
Most retailers will also offer large discounts at this time of the year. This is due to the fact that they want to clear out old stock to balance the books during tax time. If there are larger purchases you want to spend on – such as equipment, furniture, whitegoods, electronics, or even holiday packages, now is the time to get them.
3. Contribute To Your Super
Putting more money into your superannuation will help minimise the amount of tax you have to pay. Sacrificing some of your salary for pre-tax income to boost your super will also lower your tax bill. Do check with ATO for more details because there are annual contribution limits.
Self-employed Australians can also claim their after-tax super contributions as tax deductions. This allows you to reduce your next tax bill, while building a secure future for yourself.
4. Donate to a Charity
Donating to a charity is not only good for your heart, but it has positive repercussions by the time that tax season is around the corner. Donations can offset your debt or help increase your refund. So go ahead and make tax-deductible charity donations this financial year.
5. Search For Other Deductions
There are other expenses that you could still claim as tax deductions, so do check if you have anything else that can be considered. For example, if you have income protection insurance, prepaying your premium insurance for the next 12 months will allow you to claim a tax deduction for the current financial year. For more information, check the ATO website or ask your accountant for any legitimate deductions.
6. Be Wary of Scams
There has been media coverage about an ATO scam that targets consumers through fake emails that look like they’re from the ATO, but are actually coming from scammers who are after your details. Phone scams are also quite common, such as calls from bogus ATO personnel stating that you have committed tax fraud. They will also ask for your bank details after threatening legal action.
The ATO will typically send a letter before contacting you. If they do call, they will give you a number so you can phone to confirm that you’re dealing with the tax office. If you’re unsure about the authenticity of these calls, you can contact the ATO on 13 28 65.
7. Claim Your Expenses the Right Way
As with the information in #5, you can claim tax deductions if you properly keep your receipts. Never lose these and make sure you take photos to file them accordingly. Your tax deductions will be heavily based on your legitimate receipts. To make things easier for you, use an invoice or receipt documenting app that can help you track everything. The ATO also advises that you keep written evidence for five years. Make sure that you also keep evidence for an acquisition or disposal of an asset.
You can also log the use of personal devices for business reasons. Keep a diary of the daily usage of a computer, laptop or phone to substantiate your claim. You can also keep a logbook of your car use. For anything that can be claimed, keep a diary or input details on an app so that you can claim deductions for it.
Record your travel expenses as well, especially when you go to some place for one night or longer. If you travel for longer than six nights, keep a diary of dates and times, how long claimable activities occurred, and the description of the activity.
On another note, don’t forget to keep your invoices because the ATO needs them. You can claim costs for a job if you can prove that the job took place.
It all boils down to how you manage, organise and keep your receipts. If you find it hard to keep track of everything, use a receipt recording app or the ATO app to help you document your expenses. You’ll get to save a lot of money if you account for all the claimable tax deductions in your business.
Do take note that self-employed business owners can claim immediate deductions for capital assets up to $20,000. If you need funds to invest in your business, take a look at the financial solutions here at Bizzloans. We connect you to dozens of lenders and over 800 financial products to cater to your business needs, especially when it’s almost the end of the financial year.