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10 EOFY tips from a real life accountant!

By Daniel James on May 27, 2015 3:39PM
10 EOFY tips from a real life accountant!

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"Cash flow can become one of the biggest problems for small and medium businesses at the end of each financial year," warns David Henderson, chief executive of accountancy group ROCG Asia Pacific. Fortunately, he has some advice on how to mitigate these problems. But first...

"There can [also] be a down-time in trade for stocktake, slashing of profits margins due to seasonal sales, the settling of debts, chasing of creditors, and a binge of last minute budget-balancing spending.

"Without planning, tax time obligations can deplete current cash flow reserves and this can have a negative impact on the following year's operations," he says.

Depending on the nature of your business you may also find that some customers go quiet at this time of year because they've already exhausted their budgets.

Henderson, who also founded the business forecasting too CashMaxForecaster.com, has 10 tips for getting through this time of year andsetting you up for a profitable and IT-enhanced 2015-16.

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1. Embrace change: The business environment and your own circumstances change, so adjust accounting and management practices accordingly or risk limiting growth, productivity and profit.

2. Leverage low interest rates: Consider if it is worth investing in capital equipment and paying off debts while keeping lines of credit open, but start budgeting for higher rates over the next few years.

3. Cash upfront and in advance: Counterintuitively, paying in advance can be beneficial. Savings of up to 10 percent can be achieved by shopping around and being willing to make a one-off, advance payment - especially if that puts you ahead of a forthcoming price rise (eg, health insurance). This can be more than you can earn on cash deposits.

4. Direct debit not direct debt: If suppliers offer discounts for paying by direct debit, that's an opportunity to save money. Just be sure that there is always enough in the relevant account to cover these payments or penalty charges are likely to wipe out the savings. Your credit rating may also be harmed. Remember to check that the payments are actually going through.

5. Dance with the dollar: Exchange rate fluctuations are likely to affect your business's supply chain even if you aren't an importer or exporter. Fluctuations also impact consumer confidence, and when the Aussie is strong people are more likely to purchase items from overseas rather than locally.

6. Time the annual return: This one's an old favourite, but still valuable. If the ATO owes you, lodge your return as quickly as possible. If you owe them, wait until closer to the due date. If you're not sure when that is, ask your accountant or the ATO.
 
7. Choose the best GST option: Remember that the cash you are holding normally includes the GST that you're going to remit to the ATO. Failing to make that allowance can blow a big hole in your budget. A small business with an annual turnover of less than $2 million or with a GST turnover of less than $2 million can pay GST by monthly instalments or quarterly, so choose the one that suits you best.
 
8. 1 July changes: This year they include a reduction in the company tax rate from 30 percent to 28.5 percent, an additional levy for businesses with a taxable income of more than $5 million, a freeze on income thresholds for private health insurance and the Medicare levy, and changes to family benefits and taxes. Some of these affect your business directly, others may have secondary effects as they are likely to change household expenditures.

9. Off peak rates: Even if accounting and legal fees stay the same year round, seeking advice in off peak times can mean an adviser might be better focussed or more appointments are readily available. It also means the next round of end of year planning can start as soon as possible.
 
10. Depreciation, deductions and donations: Grab all cheaper directly deductible bargains right up until midnight on June 30. A deduction is a deduction based on its purchase date, not whether or not it was used. [That said, you'll need to make sure you have the means to pay for them - especially if you're inclined to take immediate advantage of the budget measure that allows the immediate write-off of items costing up to $20,000  .] Be aware too that charitable donations and gifts can offset tax liability. Before claiming a tax deduction, check that the organisation has deductible gift recipient (DGR) status.

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Tags:
business environment business forecasting david henderson eofy finance rocg asia pacific tax tips
By Daniel James
May 27 2015
3:39PM
0 Comments

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