Business Tax Planning and What You Need to Know

23 Aug, 2023 By: Lotus Smart

All businesses need to have an established tax plan prior to June 30^th (the final date in the financial year) in order to make smart decisions that will improve the likelihood of getting a good tax return. Below, our small business accountants in Melbourne detail some tax planning strategies that can help your business get a satisfactory tax return.

Superannuation

As a business owner, you can make additional contributions to your super fund and claim that as a deduction in your business tax return. This can be done throughout the financial year, not just near the end of it. However, you must be careful not to exceed the concessional cap of $27,500 (New cap effective from 1^st July 2021), as the excess will be taxed at your marginal tax rate and would therefore defeat the purpose of this strategy.

Bad Debts

If there are any debtors that owe your business money but will not likely ever pay it back, these debts can be written off to minimize your business’s tax liability. Businesses can only claim this type of tax deduction if there is actual money owed and where a debt has been included in assessable income, and this must be recorded in writing.

Prepayments

Businesses can pay upfront for some of the expenses they will encounter in the next financial year during the current financial year. Prepayments will normally be tax deductible during the eligible service period, which is the period of time that the expense being paid for occurs. Such expenses can include rent, insurance, utilities, registrations, subscriptions, and interest. Up to 12 months of the following year’s expenses can be deducted from the current financial year.

Obsolete Stock

It is common for businesses to have a large amount of old stock that is taking up space in some type of storage area. Any old stock that is obsolete, damaged, has lost its worth, or is somehow costing you money can be classed as a write-off to give your business a tax deduction.

Learn More Today

Are you a business proprietor that has been wondering “Where can I find business accountants near me who can save my business money on tax?” Book an appointment with one of Lotus Smart’s chartered small business accountants in Melbourne today by either calling (03) 9561 9922 or submitting an online inquiry.