June Tax Tips
It’s June again.
For sole traders, freelancers and other small businesses, as soon as the calendar flips over to June it’s time to work out your tax liability for this financial year, your expected expenses over the next couple of months, and your expected earnings for the rest of June this year.
If like me you don’t know how to read your accounting program reports, you can get your accountant to do this for you.
Once you know how your business is travelling this financial year, have a think about what’s likely to happen next financial year. Is anything happening next year that might increase or decrease your earnings? Do you have any major expenses coming up next year that will (obviously) decrease your profit? Next financial year, are you likely to have re you likely to have higher, lower, or similar gross earnings?
- If it makes tax/financial sense to have a lower profit this financial year, you can bring forward some of your expenses so they fall within this financial year (not next financial year). e.g. If you need a new computer, or piece of machinery, buy it prior to 30 June. If you don’t need it, don’t buy it. Basic business sense.
- If it makes tax/financial sense to have a higher profit this financial year, put off any expenses that you can until after 30 June so they fall within the 2018/18 financial year instead of this financial year. e.g. If you need a new computer, or a new piece of machinery, wait until 1 July to buy it if you can.
However, it only makes sense to do this if you have a pretty good idea of what your earnings are going to be next financial year. Otherwise you might do more damage than good by increasing or reducing your expenses this year or next.
If you have any basic book-keeping/accounting tips for very small businesses, please feel free to share them in the ‘comments’ below this article!
For more articles about managing a small business and particularly managing sole trader or freelance businesses, go to: Managing your business.
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