Finance

SBDC BLOG Tax-time tips to prepare for a downturn Like many businesses in our current environment, you may be expecting a downturn in your turnover for the next financial year. We’ve put together some tips on how to prepare from a tax perspective. From staffing challenges and supplier constraints to customer behaviours and global events, there are many reasons your business might be preparing for a quieter financial year. Here are some things you might be able to do now in terms of your tax planning to get ready for the year ahead. If your business has been impacted by an emergency event or disaster, call the ATO’s emergency support line 1800 806 218 or visit their website. Take control of your planning If you’ve taken a look at your expected taxable income (that’s the assessable income for your business after any allowable deductions) for this current financial year (2023-24) and created projections for your likely taxable income for next financial year (2024-25), that’s a great start. By knowing a downturn in your income could be likely, you can take control of your tax planning now. Speak to your accountant If you don’t already use the services of a suitably qualified accountant, now could be the perfect time to work with one. Take a look at our Choosing an accountant information guide to help you make the right decision about your support network. Your accountant can help you with tax planning strategies you might not have considered, such as taking advantage of any special depreciation measures. For example, they might help you explore temporary full expensing or the instant asset write-off which allow you to immediately deduct the business portion of the cost of eligible depreciating assets that are first held and first used (or installed ready for use) for a taxable purpose between the eligible date periods. Review your cashflow Depending on your situation, there could be some tax advantages to prepaying some of your 2023-24 expenses in the current financial year. This could include expenses such as your rent, insurance or subscriptions to professional associations. Speak to your accountant for advice, as you may be eligible to deduct up to 12 months of the following year’s expenses in the current tax year. You might also be able to take a look at your invoicing and delay some of it to next financial year, rather than account for that income in this financial year. Always check with your accountant to make sure this is an appropriate strategy for your business. If your business makes a loss, you may be able to claim a deduction for it in a future year, offset it as a current year loss or carry back your tax loss. Find out more about business losses and discuss your financial position with your accountant. Consider other income If your business received government income such as COVID-19 stimulus payments, remember that you will need to include them as assessable income in your business income tax return. You may be eligible to apply for a range of small business grants or payments to help support your cashflow. For example, there may be stimulus payments available or the Australian Apprenticeships Incentives Program if you have apprenticeships in your business. Remember to speak to your accountant about whether these would need to be included as assessable income for your business. Learn about your deductions If your business is new, ask your accountant about whether you could be eligible to deduct any start-up expenses such as obtaining legal or accounting advice on your business structure, or set-fees such as your ASIC company registration fee. To help make this easy, keep receipts for all business expenses with notes detailing the nature of the expense and how it applies to your business. Your accountant can then maximise your deductible expenses within the permitted rules. Even if you have been in business for some time, you might be surprised at some of the items you can and can’t deduct for your business.  Build your tax-time toolkit The more you understand about your tax obligations and opportunities, the better for your business. If you’d like to learn more about managing your finances, register for one of our upcoming workshops. You might also like to check our end of financial year checklist, explore our range of financial tools and templates to help you plan ahead or read our quick guide to tax deductions. More information For more tax-time tips, explore what you can do if you’re expecting a higher income next financial year or expert tax tips. For tax advice or specific tax information, please speak to your accountant or check the ATO website for details. Finance Share Facebook-f Instagram Youtube Linkedin Related Articles Tax-time tips to prepare for a downturn Learn more Our quick guide to tax deductions Learn more Why your credit rating matters in business Learn more

SBDC BLOG Our quick guide to tax deductions Tax time can be a stressful time for many business owners. It can be confusing keeping on top of deadlines, changing rules and deductions. The best place to start with your taxes is by enlisting the help of a tax professional to make sure you’re on track with your deductions and tax obligations. You don’t want to claim for deductions you later find out you’re not eligible for, as strict penalties could apply. The good news is that the money you pay for professional tax advice could even be deductible in your next tax return (your tax adviser can confirm if their fees are tax deductible). Here’s a quick guide to help you streamline your tax deductions. Know your industry Every business and industry is different, so don’t assume you can claim the same tax deductions as a friend or family member with their own business. What you can claim depends on what kind of business you run. For example, if you run an entertainment business, you might be eligible to claim the cost of musical instruments or dance lessons – but this wouldn’t be a legitimate deduction for a bakery, plumbing or book-keeping business. To find out what counts as a deduction in your business – and what kind of records you need to keep – speak to a professional tax adviser. You can also visit the Australian Taxation Office (ATO) website for occupation and industry specific tax deduction guides. Know what you can’t claim As a general guide, the ATO accepts a valid business deduction as an expense for your business incurred for the purpose of generating a profit,  not for private use. If the expense is for both business and private use, you can only claim the part used for your business. As an example, if you travel to a different city to attend an industry conference or meet with clients, you could be eligible to claim the cost of your travel as a tax deduction. You can’t, however, add a few days to your hotel stay for a holiday and claim those extra days as a deduction. Along the same lines, the business book you buy in the airport lounge could be a legitimate business deduction (depending on your business) but a souvenir snow globe would not be likely to count as a deduction. Keep efficient records A shoebox of receipts is probably not the best way to keep your tax records – but there are many other solutions available. Speak to your accountant about the software, apps or record-keeping systems which might suit your business. These may not only help you keep better records, but save you time and money. If you’re planning to claim deductions related to a vehicle, make sure the log book for your business vehicle is up-to-date. You’ll need to start a new log book if your current one is more than five years old or if your vehicle usage has changed significantly. You could also consider investing in an app to track your mileage in digital form. Stay informed as things change Times change, and so do the tax rules. The pandemic changed working conditions for a lot of people, so you might also be eligible for working from home deductions which didn’t apply before. Check with your accountant – or with the ATO – about exactly what you can claim as a deduction. Don’t assume that you know from previous years. And keep in mind, while you may be able to claim items as a deduction, there could be other implications to consider, such as fringe benefits tax. Your accountant can provide advice and actions to follow that are specific to your business. More information For more tax-time help, explore our: information on what can you really claim as a tax deduction end of financial year checklist expert tax planning tips  attend one of our financial management workshops tips on what you can do if you’re expecting a higher income next financial year information on how to prepare for a downturn in your income Finance Share Facebook-f Instagram Youtube Linkedin Related Articles Our quick guide to tax deductions Learn more Why your credit rating matters in business Learn more 1 July 2024 changes that may affect your business Learn more

SBDC BLOG Why your credit rating matters in business A bad credit rating isn’t helpful in your personal finances – but did you know it can impact your business finances too? While your business may experience fluctuations in cash flow for a range of reasons, it’s worth ensuring you can pay your bills and debts on time to protect your credit rating.  Here’s what you need to know about your credit rating – and what you can do to avoid a bad credit rating which could impact your business in the future.  What is a credit rating? At some point in your business, you may need to apply for credit with suppliers, a credit card or a loan for personal or business reasons. Your credit rating provides information to the credit provider (such as a bank or other business) about whether you’re likely to be able to manage to repay that credit. A credit rating is a way of providing this information in a way to protect your personal details and give your credit provider the information they need to assess your application. If your business operates as a sole trader, your personal credit rating is also your business’ credit rating, as you are the entity in business. What is a ‘bad’ credit rating? Your credit report will include information about any debt agreements, payment defaults, bankruptcy, financial hardship and other relevant details. A credit rating can be considered “bad” if any of these details show you are not likely to be able to repay future debts, such as a loan or credit card you might apply for. Depending on your business, your situation and the type of credit you are applying for, having trouble paying one type of credit can impact the likelihood of getting further credit. Changes in credit scores can significantly affect business operations. For instance, when one business experienced a shift in its credit rating, its suppliers became aware and reevaluated their terms. Consequently, they moved the business to a cash on delivery (COD) payment arrangement, which had an immediate impact on the cash flow of that business. How to avoid a bad credit rating There are a few simple things you can do to protect your credit rating, both in personal and business terms: Know your rating You can access your credit report through a credit reporting body throughout the year. Pay your bills on time Whether it’s your utility bills, personal credit card debt or supplier invoices, it’s important to keep your bills paid and up to date. If you think a payment might be late, take action and contact the biller sooner rather than later. You may be able to arrange a payment extension or payment plan to stay on top of your debts. Manage your debts Review your business and personal debts regularly and try to only borrow what you can comfortably afford to pay back.  Tip : If you do find issues with your credit score, try to take action as soon as possible to repair your credit score. Don’t pay to fix your credit report. If something is incorrect, you can have it fixed – but you can’t erase something just because you don’t want it to appear on your credit report.  Find out more Check the four key factors banks check before giving business loans or learn more about business finance and loans. If you need urgent help with your finances, take a look at help for businesses in financial distress. If you’d like to discuss an issue in your business, contact our free business advisory service to speak with a business adviser. Finance Share Facebook-f Instagram Youtube Linkedin Related Articles Why your credit rating matters in business Learn more 1 July 2024 changes that may affect your business Learn more Are you using the right tax or BAS agent? Learn more

SBDC BLOG 1 July 2024 changes that may affect your business New minimum wages The minimum wage for both the national and state industrial relations systems will increase from the first pay on or after 1 July 2024.  National minimum wage increase If your business operates under the Fair Work federal industrial relations system (covering businesses such as ‘Pty Ltd’ companies), the new national minimum wage will be $915.90 per week or $24.10 per hour. This rate takes affect from the first full pay period starting on or after 1 July 2024.  The national minimum wage increase covers all employees who are not covered by an industry award or registered agreement.  Visit the Fair Work website for more information about the national minimum wage increase.  State minimum wage If your business operates under the WA state industrial relations system (covering sole traders, some micro businesses, unincorporated partnerships and unincorporated trust arrangements), the new minimum wage will be $917.80 per week or $24.15 per hour.  Visit the Wageline website for updated WA award summaries and minimum pay rates for award free employees.  Super guarantee rate increase The super guarantee rate will increase from 11 per cent to 11.5 per cent on 1 July 2024. This change is part of incremental increases that will see the rate increase by 0.5 per cent annually until it reaches 12 per cent on 1 July 2025.  The rate of 11.5 per cent will need to be applied to all salary and wages paid on and after 1 July 2024, even if some or all the pay period it relates to is before 1 July 2024.  Visit the Australian Taxation Office (ATO) website for details of future increases to the super guarantee.  Employment conditions For businesses operating under the national industrial relations system (eg: ‘Pty Ltd’ companies) there will be changes to the terms and conditions for casual employment and independent contractors.  These changes include new definitions for casual employment and independent contractors and new frameworks to allow casual employees to change to permanent employment and to protect independent contractors performing work on digital labour platforms that are employee-like workers.  While these changes will take place from 24 August 2024, you may find it beneficial to review these changes ahead of time to ensure it doesn’t affect any employment arrangements you have with your staff.  Ban on engineered stone From 1 July 2024, the use, supply and manufacture of engineered stone slabs, panels and benchtops will be banned.  A transition period will be in place until 31 December 2024 to allow for pre-existing contracts to be honoured, as long as the contract was entered into on or before 31 December 2023.  Find out more about the ban on engineered stone.  Federal Budget commitments As part of the 2024-25 Federal Budget, the Australian Government announced the following measures which take effect from 1 July 2024.  Energy bill relief  Eligible small businesses will receive a credit from the Federal Government towards their electricity costs. This is in addition to the $400 in energy bill relief announced by the Western Australian Government as part of the 2024-25 State Budget announced on 9 May 2024.  Instant asset write-off extended  The instant asset write-off has been extended for an additional year. Under the scheme, eligible small business owners can deduct up to $20,000 per business asset/resource for the 2024-25 tax year. These purchases must be installed and ready for use in your business between 1 July 2024 and 30 June 2025.  Please Note : this extension is dependent on legislation being passed through Federal Parliament. We recommend discussing this tax measure with your accountant, bookkeeper or financial adviser.  Keep up to date with the latest small business news Looking for the latest information to help you run a business in Western Australia? Sign up to our fortnightly e-news to get stories like this (and other important updates for small business owners) delivered straight to your inbox.  Sign up for the SBDC e-news Legal and Risk Finance Share Facebook-f Instagram Youtube Linkedin Related Articles 1 July 2024 changes that may affect your business Learn more Are you using the right tax or BAS agent? Learn more How eInvoicing can save you time and money Learn more

SBDC BLOG Are you using the right tax or BAS agent? Using an unregistered agent to lodge your tax return or business activity statement (BAS) can put you and your business at risk. The costs of being in business are rising because of An unregistered tax or BAS agent may not have the appropriate qualifications or skills needed to handle your BAS or tax requirements. If the agent is negligent with your return, you will not be protected by the safe harbour provision that protects you from liability or penalty for these errors, which would be the case if your BAS and tax agent is registered. inflation, interest rate rises and other economic factors. If you rent your business premises, you might find your lease includes details of annual rent increases. Rental increases are often calculated using a formula such as the consumer price index (CPI) plus two per cent, or what’s known as a market review (MR). Here’s your guide to understanding market reviews and how these can impact your rent and therefore, your bottom line in business. How can I check that my agent is registered? The good news is that checking that your agent is registered is as simple as: using the Tax Practitioners Board’s online register to search for your agent looking for the registered agent symbol (pictured right), a tax practitioner would also display their registration number along with the symbol Benefits of using a registered BAS or tax agent By using a registered agent you can be confident that: your agent is fully qualified and bound by a professional code of conduct you are protected under their professional indemnity insurance you can enjoy extended lodgement dates for tax returns and BAS statements End of financial year resources For more information on your business and tax obligations, read our finance information and our tax time tips, including: free end of financial year checklist expert tax tips tax planning tips for a bumper year ahead how to prepare for a downturn in your income. quick guide to tax deductions You can also contact our free small business advisory service on 133 140. More information If you discover the agent you are using is unregistered, contact the Tax Practitioners Board For more tips on finding an accountant, read our choosing an accountant information guide. Finance Share Facebook-f Instagram Youtube Linkedin Related Articles Are you using the right tax or BAS agent? Learn more How eInvoicing can save you time and money Learn more 1 July 2024 changes that may affect your business Learn more

SBDC BLOG How eInvoicing can save you time and money You might think eInvoicing is what happens when you email invoices from your accounting system but there is much more to it, including a number of benefits for your business. Here is our quick guide to the benefits of eInvoicing. What is eInvoicing? eInvoicing is a secure payment method designed to streamline payments between businesses and their suppliers, contractors or clients, using existing small business accounting softwareeInvoicing allows invoice information to be digitally transferred directly between a buyer’s and supplier’s accounting systems, even if these systems are different.  This removes the need to generate manual invoices or enter invoices for payment into your financial system. Importantly, as eInvoicing is done via a secure network, it reduces the likelihood of invoice scams. What do you need to get started? Many business accounting software providers are building eInvoicing into their products and may include free or low-cost solutions depending on your invoicing needs. To start eInvoicing, your accounting software (and that of your recipient) needs to be connected to the Peppol network (eProcurement framework as well as main secured network used in many countries and adopted in Australia) where eInvoices are delivered securely by Australian Taxation Office (ATO) approved service providers. The ATO administers the network but can’t access or view your invoices.  Your software provider will provide instructions on how to connect to the network. If you send or receive invoices using accounting software such as MYOB or Xero you should check with your software provider to see if they are eInvoicing enabled and follow their steps to get started. If your accounting software can’t eInvoice, you can start eInvoicing now by either: connecting your software to an add-on eInvoicing product, or purchasing accounting software that can eInvoice. The benefits of eInvoicing REDUCES THE LIKELIHOOD OF INVOICE SCAMS eInvoicing reduces the risk of scams and fraud as: eInvoices are sent via a secure network by ATO-approved service providers (the ATO administers the network, but can’t access or view your invoices). An Australian Business Number (ABN) is used to deliver invoices to the right business, with less risk of fake or compromised invoices, which were the most prominent scams reported by business in 2023. SAVES TIME eInvoicing can save you time by not having to re-key or scan invoices, fix errors or chase up overdue or lost invoices. Your invoice data will also be more accurate and complete as key details are checked before the eInvoice is sent. FASTER PAYMENTS eInvoicing means fewer errors and lost invoices, avoiding unnecessary delays in getting paid. Federal government agencies are paying eligible eInvoices within five working days. COST SAVINGS Research shows it costs businesses around $30 to process a paper invoice and $27 for an emailed PDF invoice, but it costs less than $10 to process an eInvoice. Your actual savings will depend on your processes, how many invoices you send and the time saved in managing your invoicing. INCREASED VISIBILITY OF YOUR FINANCES eInvoicing provides better visibility throughout the invoicing process which can help you better manage your cash flow, planning and budgeting, helping you more accurately manage your business financials. CONNECT ONCE, TRADE WITH MANY Australia has adopted Peppol, an international standard, that allows digital invoices to be exchanged between different software or systems. Once you’re connected to the Peppol network, you can exchange eInvoices with any business on the network that is also connected, regardless of their size or software. Next Steps in eInvoicing If you think eInvoicing might work for you, getting started is easy: Check with your software provider to see if your software is eInvoicing enabled and follow their steps to get started. If you don’t use software, there are free and low-cost options available to help you start eInvoicing now. Talk to your trading partners to see if they’re already connected. If not, encourage them to connect and start exchanging eInvoices with you. More Information Visit the ATO website for more information on eInvoicing for business. Government leads the way to shorter payment times How to turn excuses into payments Providing credit to customers Finance Share Facebook-f Instagram Youtube Linkedin Related Articles How eInvoicing can save you time and money Learn more Ready, set, GROW your business Learn more 1 July 2024 changes that may affect your business Learn more