Apr 29, 2011
As the financial year is fast approaching, you, as an owner of a small business entity will find it worthwhile to review your accounts and put into place certain measures that will save you paying unnecessary amounts of tax.
Get your books up to date
The first thing you will need to do is get your books up to date. Know exactly how much profit your business currently has and reduce it by the amount of any expected depreciation. This is therefore the figure that you are likely to pay tax on depending on your business structure and other factors.
Monitor your wages
If you operate a company then you may find it more prudent to keep your wages below the 30% tax bracket ($80,000) and keep the remaining profits within the company which will be taxed at 30%. The profit will then become available to you as a dividend (with tax already paid up to 30%) once you have paid the company’s tax bill.
Pay back any loans you have to your company
Be sure not to owe your company any money at the end of the financial year, as this can be treated as income in your personal name and potentially taxed at a higher than expected tax rate.
Prepay expenses
If you have monthly expenses that span 12 months or less, then an immediate deduction is potentially available to you if the amount is paid before 30 June.
Utilise your super fund
Whilst most of you are hesitant to contribute to super as you will not have immediate access to the funds, if it comes down to a matter of paying tax or paying super, then super wins hands down as you will have access to it as you retire.
Pay your staff super before 30 June
Unpaid staff super as at 30 June is not deductible until the following year, even if you pay it by the due date of 28 July.
The above tips are general in nature. To determine if the above will be available to you, and to learn more tax effective strategies please contact David Femia on 9316 4500. Please also feel free to visit www.femia-accountants.com.au