ABC end-of-financial-year success for small business

Check the financial health of your business now!
EOFY is THE TIME to set resolutions for your business for a new financial year. 

budgetWell-organised businesses undergo financial housekeeping to minimise risk and maximise profits and growth. Using these pointers can help improve your own business.

1. Assess your strategic plan
The objectives you have for your business and personal life are reflected in your strategic plan. After checking your business' financial health, reconsider your strategic plan including analysing your market and trending future developments.

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Tax time: your business in the ATO’s sights

Around 3.8M small businesses, including 1.6M sole traders, in Australia
We employ around 5.5 million people and contribute $380bn to the economy. Small business is also in debt to the ATO to the tune of $15bn.

ATO looking closely at businessThis tax time, the ATO has stated they are looking closely at taxpayers:
  • setting up or changing to a company structure (See our free factsheet DIY Business Structures)
  • claiming motor vehicle expenses
  • who may not be correctly apportioning between personal and business use

There is a multitude of data-matching programs and benchmarks to catch out those attempting to rort the system. 

For wealthy groups and medium businesses, the focus is on structuring to avoid tax:

  • international risk - international profit shifting and corporate restructuring
  • inappropriate arrangements that seek to extract profits or capital without the right amount of tax being paid
  • high risk trust arrangements attempting to gain advantage beyond ordinary trust arrangements or tax planning associated with genuine business or family dealings.

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New Superannuation Personal Liability Regime

Before you become a director

If you are about to become a company director, check for any unpaid or unreported PAYG withholding or SGC liabilities.

directorIf you become a company director and the company has outstanding PAYG withholding and SGC obligations, you will become personally liable for a penalty equal to these amounts (these are called director penalties).

As a new director, you have 30 days, starting on the day of your appointment, before you become liable to director penalties equal to both:

  • all of the company's unpaid PAYG withholding liabilities;
  • all unpaid SGC liabilities from 1 April 2012.

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Business structures

Setting up a business structure

If you are starting a business you will need to work out which type of business structure to use. 

business structuresWe explain the benefits and disadvantages of different types of business structures.

Sole trader
A sole trader is the simplest business structure and it is inexpensive to set up because there are few legal and tax formalities.

If you operate as a sole trader, you're responsible for all aspects of the business, including any debts the business incurs and there are no limits on this liability.

You do not need to register the business with ASIC unless you are conducting business under a name other than your personal name.  Read more…

Tax time: deductions in the ATO’s sights

Work related deductions for you

Last financial year, over 8.8 million taxpayers claimed $21.98 billion in deductions for work related expenses. 

accountingIt's an area under intense review by the ATO. If you claim work-related deductions, it's important to ensure that you are able to substantiate any claim you make.

To claim a deduction, you need to have incurred the expense yourself and not been reimbursed by your employer or business, in most cases you need a record proving you incurred the expense, and the expense has to be directly related to how you earn your income – that is, the expense is directly (not sort of) related to your work. 

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