Are you "EOFY Ready"? Do most of us even know what that means? An article in the West Australian (Saturday 18th June 2016) written by Vetti Kakulas stated that small business owners must prepare for tax time or suffer the consequences. She quotes as her source, WA’s leading financial advisors. Additionally, SME’s are being urged to make the most of Tax deductions that they are entitled to. Unfortunately, many small business owners are;
Not fully aware of their tax deduction entitlements and ;
Are not prepared in time and often miss out on what they can claim.
Not in a position to meet tax liabilities when they fall due.
Are not receiving the right advice or support required to assist them with the above.
Consequently, many SME’s not only pay too much tax, but more importantly do not have the means to meet the tax liability when it arises. According to the ATO, the total tax liabilities owed to them increased by 27% from 2011 to 2014. Even more startling is the fact that 62% of the $53 million debt can be attributed to small businesses. So what can you as a business owner do to ensure that you are EOFY ready and able to meet your tax liabilities when they fall due?
Be organized -Many businesses miss out on valid deductions, simply because they don’t have their paperwork in order and lose valuable receipts. That is a loss of about 30 cents in the dollar for every receipt that isn’t claimed. Store shoes in the show box and Implement good accounting systems
Know and manage your debts – especially your tax liabilities.Review your accounts on a regular basis and quarantine the ongoing BAS and tax liabilities to assist with cash flow when the obligation is due to be paid.
Plan for your businesses future – Start looking forward. Review your cash flow forecasts to identify any possible periods where business is tight. Make adjustments by moving expenses to a better time, put off capital purchases OR seek an investment of capital
Keep the cash flowing – collect your receivables
Maintain good relationships – with your bookkeeper/accountant – they understand the BAS and Tax environment and can assist you with all of the above.
So armed with this practical information – You can now be on thethetherright path to be ready for the NEW financial year.