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Tax tips from your small business tax accountant

 

 

We are now another week closer to the end of the financial year so here are two more tips from your accountants in Sydney that all small businesses can benefit from.

The first item to highlight this week is that all small businesses must do a thorough analysis of their outstanding sales debtors, that is, who still owes them money. Any old debtors that you know are not going to be recovered should be written back as bad debts to reduce your taxable income and to keep a tidy set of accounts for the start of the new financial year on 1 July. It's worth your time to do this as you may well find that in reviewing these old debtors and making enquiries that some of them may just decide to pay you and boost your cash flow. Writing off uncollectable bad debts prior to 30 June allows you to offset that lost income as an expense and thereby reducing your taxable income for the current financial year. If you are unsure on how to approach this process or just not confident in approaching clients with long standing debts then seek advice from a trusted business accountant who can guide you down the correct path.

The second item for close attention is one I wrote about in my budget blog on 9th May and is worth repeating again at this time of year. These changes only apply to small businesses with annual turnover under the $2 million threshold. The changes to small business concessions announced in the most recent Federal budget allow you to receive a much greater tax benefit from delaying the purchase of capital items until after 1 July. After this date, all small business assets costing less than $6,500.00 can be immediately claimed as a deduction rather than having to depreciate them over the life of the asset. So it may well pay to keep that old dishwasher or computer running for just a few more weeks before replacing it with a new piece of equipment. In a similar vein, the acquisition of a new motor vehicle should also be delayed until post 1 July as you will then receive an instant write off of $5,000.00. Note that this is not a rebate, it is an accelerated tax deduction that reduces your taxable income for next financial year.

Stay tuned for more end of financial year small business tax tips from your tax accountant over the next few weeks as we draw the curtain on 2011/2012.

 
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