Hi [First Name],
The end of financial year is almost here. While having a tax bill is a sure sign that your business is profitable, it’s easy to pay too much tax. Its important to structure your business, your developments and your personal affairs
in the right way and put strategies in place to reduce your tax bill.
While we’ve seen construction businesses delaying sending out invoices until after the end of financial year to reduce their taxable income, this can create a significant cash gap in the business. They often then take longer to be paid and typically indicates the business owner does not have a well thought out tax management strategy.
If you have made a loss in 2012-13 it is also worth noting that you may be able to carry the loss back and obtain a refund for taxes you paid in 2011-12. (up to $1m)
Here’s Seven key areas you should consider prior to June 30:
1. Prepare an income tax estimate for the business so you can plan to pay directors fees or salaries, dividends or additional superannuation contributions based on your available cashflow and estimated tax liability. A franked
dividend can also have some tax advantages worth considering.
2. Pay all your 9% Superannuation Guarantee contributions or performance bonuses for your employees by 30th June to ensure you can claim the tax deduction
3. As a small business you can claim an immediate write off for assets worth less than $6,500. If you are considering any such purchases, prior to 30 June could be the time to take action.
4. If you have any bad or unrecoverable debts, be sure to write them off prior to 30 June.
5. Consider prepaying any tax deductible expenses for the coming year prior to 30 June to bring the deduction forward.
6. Consider realising any capital losses by disposing of loss generating assets before year end.
7. Do a full stock take on 30 June to write off any missing or old stock and ensure your balance sheet and asset register remains correct.
For 2014, here’s some other key items to review and consider for the year ahead to ensure your financial wellbeing:
1. Review how you are drawing your income or profits from your business, if it’s paid via a family trust, it can be significantly more tax efficient.
2. Consider setting up a Self Managed Superannuation Fund (SMSF) to allow you to invest in direct assets like property for faster wealth accumulation.
3. If you are doing your own developments, consider partially funding them using a SMSF, the profits that get returned to your fund will only be taxed at 15%, less than half of what you would otherwise pay.
4. Consider purchasing your own business premises also through an SMSF if possible.
5. Look at engaging a licensed Wealth Advisor to create you an integrated financial plan or blueprint that considers your company and personal income, your financial position and goals and documents your best strategy in the coming years to accumulate wealth in a tax efficient manner.
Please contact Jeremy Carter from Fusion on 1300 038 746 or at Jeremy@fusionfs.com.au for more information or to discuss any of the items above.
To your ongoing success,
Remember to visit our new facebook page for your Free Builders Business
Disclaimer: The above is general advice and may not be appropriate to your specific situation. Further analysis and a formal statement of advice will be needed before proceeding with the strategies suggested. Fusion Private Wealth ABN 46 152 465 462 is a Corporate Authorised Representative and Corporate Credit Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557. Fusion Accounting and Advisory is a registered Chartered Accountant Firm.