25 May Tax Time 2020
Well, 2020 tax time, should make for an interesting experience. Given the current state of the universe it’s hard to tell what to expect.
We are big fans of being prepared. We like to have our duckies all lined up nicely and ready to go. And we don’t like surprises.
That in mind, we’ve put together a list of things to start thinking about and start getting prepared for to be on the front-foot for tax time 2020.
Now, let’s be frank. We aren’t Accountants or Financial Planners. The below is intended only to give you something to think about, it’s not advice and shouldn’t be construed as such. Please speak with your Professional Advisers to find out what will work for you and your business.
Ask for help.
Don’t be the smartest person in the room. It didn’t work for Enron, it’s not going to work for you. Facts are, there is no feasible way any single person could know and understand all the intricacies required to understand what’s needed for tax time. This is why we have specialised professionals who do this stuff day in, day out. Look to your network of friends, associates and professional advisers. What can you learn from others who are leaders in their fields? Do you have any insights you can share with them? Asking for help only puts you and your business in a stronger position.
Know the rules, then make them work for you.
A great example of this is the Governments Instant Asset Write-off. The Governments Backing Business Incentive has a series of initiatives that have been made available to eligible businesses. Take some time to review these and ensure you are getting all the bang for your buck you possibly can. Your Accountant can assist you in navigating this minefield, reach out and ask for help if you need it.
Line those ducks up.
Take the time to organise your paperwork, make sure you have all receipts and can account for each expense and all lines of revenue. If you really want to make a difference for yourself next year, take the time to set up a process that allows you to manage your paperwork on auto-pilot. Talk to your advisers about a digital system that could save you from all those loose pieces of paper floating around in your centre console……you know what we’re talking about.
Also, be sure to separate your personal and business expenses to make tax time a quick, easy and painless process for both you and your Accountant.
Make a payment to your superannuation or pay down debt.
Have a few spare dollarydoo’s lying around? Put them to work. Paying down debt or boosting your super are great ways to make the most of tax time. Chat to your accountant to find out how this can work for you.
Review your rates and terms
Are you getting the best deal on your debt? Now is a great opportunity to put the screws to your Bank for both your Business and Personal debt to get a better deal. That said, it’s important to be realistic about your expectations, keep in mind the impact COVID-19 is having on everyone in business and don’t expect that changes and reviews will happen quickly, or at all.
Review your invoicing and terms of sale.
Now is a great time to review and update your terms and conditions of sale. Things have changed, it might take longer to receive your stock from international and local suppliers. Maybe you were able to find a manufacturer who is able to make your product using locally sourced materials, the cost is a little higher but the quality is outstanding. Maybe your pricing could do with a little refresh, or your terms amended to provide a stronger cash flow cycle for your business. Now’s the time.
Review systems and processes.
EOFY is a great opportunity to look at what is and isn’t working within your business. Use trends and comparisons to see what *could* change, then work to test your hypothesis (alternatively, outsource the whole shebang to another member of your team who can objectively view a process with fresh eyes AND do the heavy lifting on this). Use this time to objectively think about what changed during iso and how that impacted your business. Do you need to pay rent on a massive office when you’ve proof that ¾ of your team can, and want to, work from home? Perhaps you’ve been working effectively without paper and now have no need for printers and boxes of Rexel. Review and test.
Boost your reserves.
A little spare change in the kitty is a great idea. Boosting your cash reserves give you the freedom to take advantage of immediate opportunities, think a property purchase or special pricing on stock. Squirrel away what you can for that rainy-day scenario.
Be strategic with CGT.
Speak with your adviser to discuss the sale of any CGT incurring expenses.
Your professional advisers will help you understand how to time the sale according to what best suits your tax needs.
Budget for expenses and pre-pay where you can.
What bills have you got upcoming? What were you able to defer during lockdown? Does this still need to be paid? Do you have an arrangement with your service providers that you are paying off over a few months?
Talk to your professional advisers about where pre-payments could be made. You may be able to take advantage of an early payment discount that times well with claiming an immediate deduction. Perhaps it could give you some leverage to obtain sharper pricing.
Plan any stock purchases you need.
Speak with your accountant about when to make significant purchases. Is June or July going to work better for your overall position? Can you work with your supplier to make a purchase at a time that is mutually agreeable for both of you from a tax perspective? Perhaps a discount could be negotiated?
Look at your cash-flow requirements.
Key for this step is to be realistic. There is going to be an element of the unknown due to the current state of the universe. Work out what you need, add a buffer.
Adequate cash-flow will assist you in working through any COVID-19 related trading slumps as well as taking advantage of any EOFY opportunities that might pop up. If you need a boost to your cash-flow, let us know, we are here to help. Think about what it’s costing you not to take out a short-term loan.
Check your pay run date.
Does your EOFY pay run fall on this side of the financial year or next? A slight change in timing could be to your benefit. Check with your advisers to see what might be possible.
Just a friendly reminder, Payment Summaries are due by 14thJuly 2020.
You’re welcome :)
Are you claiming everything you are entitled to?
This one comes down to good management of paperwork and having clear conversations with your Accountant.
Having all those ducks lined up so you know what can, can’t or might be able to claim. Then it’s just a matter of speaking with your Accountant to confirm.
Plus, you have the added benefit of knowing for next year, further helping to streamline your paperwork process.
Take a moment.
2020 has been a tough year for all of us in some way or another. Remember to stop and take a moment every now and then. Your brain will need a break, your body could use a stretch, maybe your hands would appreciate doing some gardening. It’s also ok to not be ok. There are a number of organisations who can help if you just need someone to talk to.
Most importantly, take action now, it’s nearly June, EOFY isn’t too far off and we want to see you smash it!
Give your accountant and financial advisor a call now to ensure you are on the front foot.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.