As we approach the final pages of 2023, it’s time for small business owners to engage in a meaningful review of the year gone by, celebrate victories, learn from experiences, and strategically adjust sails for a promising 2024. This blog post is your guide through the process of reviewing, reflecting, and revising specifically tailored for small businesses.

1. Sip, Reflect, and Review

Grab a cup of your favorite brew, find a quiet corner, and embark on a journey through the events and decisions that shaped your small business in 2023. Review the milestones, challenges, and growth points. Consider the goals you set at the start of the year and assess your progress. Make note of key observations to inform your reflections.

2. Celebrate Wins and Draw Insights from Challenges

Take a moment to revel in the victories, big and small, that your small business achieved. Equally, examine the challenges faced and draw insights from how your business navigated them. Reflecting on both successes and setbacks offers invaluable lessons that can guide your business strategy in the coming year.

3. Revise Goals with a Small Business Focus

Armed with insights from your reflections, tailor your goals for 2024 to the unique context of a small business. Consider the nimbleness required, the local market dynamics, and the personal touch that small businesses bring. Craft clear, achievable goals that align with your small business ethos and contribute to sustainable growth.

4. Fine-Tune Your Fiscal Approach

Extend your review to the financial side of your small business. Scrutinize your budget, expenses, and revenue sources. Identify areas where financial adjustments are necessary and set a revised budget for the upcoming year. For small businesses, prudent fiscal management is the bedrock of resilience and growth.

5. Bolster Small Business Resilience

Reflect on unforeseen challenges encountered in 2023 and strengthen your small business’s resilience. This may involve reviewing and updating insurance policies, fortifying contingency plans, and leveraging the agility inherent in small businesses to adapt swiftly to changing circumstances.

6. Embrace Tech for Small Business Success

Consider the role of technology in your small business during 2023. Evaluate how tech tools influenced your operations and customer interactions. Explore affordable and scalable technological solutions that can enhance efficiency, customer experiences, and the overall competitiveness of your small business in 2024.

As we close the chapter on 2023, this reflective review and strategic adjustment process will position your small business for continued success in the coming year. Celebrate your small business journey, learn from the twists and turns, and chart a course for a purposeful and prosperous 2024.

As we bid farewell to 2023 and welcome the festive spirit, it’s the perfect moment to reflect on your business journey and gear up for a successful 2024. Here are some suggestions and tips to guide you as you set your business goals and resolutions for the upcoming year.

Reflect and Set Goals with a Cup of Cheer

Pour yourself a cup of coffee or tea, grab a slice of holiday cake, and take a moment to set your goals for the coming year. Goal setting is a powerful practice that can pave the way for your business’s future success. Be specific about what you want to achieve, both financially and non-financially. Write down at least three key goals for 2024, making them as detailed as possible.

Budgeting for Success

Have you reviewed your expenditures over the past few years? Take the time to analyze your bank debits and credit card statements to understand your spending patterns. Once you have a clear picture of your expenses, consider whether adjustments or reductions are necessary. Creating a comprehensive budget should be a top priority in aligning your financial practices with your goals.

Building a Financial Safety Net

Now that you’ve fine-tuned your budget, allocate any surplus funds to create a cash buffer for your business. Even small amounts can make a significant difference over time. Consider establishing a savings account with limited direct access to reinforce your commitment to saving. A financial safety net provides peace of mind and financial stability in times of uncertainty.

Boosting Your Personal Superannuation

Superannuation is not only a retirement savings vehicle but also an expense deduction for your business. Review your super contributions and explore opportunities to maximize your contributions within the set limits. Increasing your personal super can enhance your financial security in the long run.

Preparing for the Unforeseen

Develop a strategy to navigate unexpected challenges that may arise in the new year. Loss of income due to unforeseen circumstances can be detrimental to any business. Ensure your insurance policies are up-to-date and aligned with your current circumstances. Regularly review and re-evaluate your coverage to guarantee comprehensive protection, potentially saving you both money and stress in the future.

As the festive season unfolds, use this time not only for celebration but also for thoughtful planning and preparation. Wishing you a joyful holiday season and a prosperous New Year filled with success and accomplishments!

Have you ever thought about having a professional CA/CPA review your tax return? Whether you prepare and file your tax return yourself or used a non-CPA tax preparer, there are numerous benefits to having a CA/CPA tax professional review your return. 

Here are five reasons to consider it:

1. Access to Audit Representation: Simply having a non-professional doesn’t guarantee you audit representation if it arises. Working with a CA/CPA for a review and potential amendment of your return can provide you with the assurance of audit representation if you were to be audited by the ATO.
2. Ensure you claim all deductions: With the multitude of deductions available, it’s easy to miss some when filing your return, having a professional CA/CPA examine your return can help ensure that you claimed all the deductions you are entitled to. If any were overlooked, an amendment can be filed to secure an additional refund.
3. Correct any errors and avoid penalties: A tax return review may reveal errors in your return that require correction. While discovering you owe more to the ATO is not ideal, it is far better to address these errors proactively rather than facing any penalties and potential audits if they’re identified by the ATO later on.
4. Gain your own further tax knowledge: Many taxpayers find filing their return to be a guessing game, lacking confidence in their understanding of the tax environment. By having your return reviewed by a professional CA/CPA, you can gain valuable knowledge about your specific tax circumstances. You’ll learn about qualifying deductions and identifying mistakes made in your return. This newfound understanding will equip you with greater confidence for future self-filing endeavours.
5. Reviewing multiple returns: It’s not only the previous year’s return that can benefit from a review and potential amendment. Generally, returns from the past three tax years can be amended. By bringing in multiple returns, whether prepared by a non-CA/CPA or self-filed, you can ensure that any and all qualifying deductions were claimed accurately, and that income and expenses were reported correctly on older returns.

The expertise, education, and experience offered by a professional CA/CPA are invaluable when it comes to tax matters. If you’ve been filing with someone other than a certified public accountant, consider reaching out to have your previously filed returns reviewed. You might be surprised by the number of errors that can be identified and corrected on your old returns. Want to find out more? Give us a call on 9853 4754 or send us an email via info@larkinpartners.com.au

To stay compliant with our Australian Tax System, especially when preparing your EOFY return, there are several important tasks you should consider completing for your business and for yourself. So, to help you, we’ve put together a checklist of must-do tasks:

1. Review your financial records: Gather all relevant financial documents, including income statements, expense receipts, bank statements, and invoices. Ensure they are accurate and organised.

2. Lodge your business activity statement (BAS): If you’re registered for GST, you need to submit your BAS either monthly, quarterly, or annually, depending on your reporting obligations. Ensure you’ve completed and lodged all necessary BAS forms for the 22/23 financial year.

3. Reconcile your accounts: Ensure your financial records, including bank statements, invoices, and receipts, are reconciled with your electronic accounting system. Make sure you resolve any discrepancies and make any necessary adjustments before handing over to your accountants.

4. Work with your accountant to review and lodge your business and personal income tax return: As a business owner, you’ll need to lodge an income tax return for your business. Review your financial statements, deductions, and other relevant information, and seek assistance from your Larkin Partner accountant. Mak every effort to have us lodge your income tax return/s by the due date.

5. Organise your employee records: Ensure you have accurate and up-to-date records for your employees, including payroll, superannuation contributions, and PAYG withholding amounts. Lodge all necessary reports, such as finalising your payroll through Single Touch Payroll,  completing your Workcover Declaration of Rateable Remuneration form. 

6. Superannuation compliance: Make sure you’ve made all required superannuation contributions for your employees by the relevant due dates. Lodge Superannuation Guarantee Charge statements if any superannuation obligations were not met.

7. Capital Gains Tax (CGT): If you’ve disposed of any assets during the financial year, include these details with your workpapers for us so we know to include in your tax return. We will then calculate any applicable capital gains or losses and let you know.

8. Review and update your business structure: Assess your current business structure and determine if it’s still suitable for your business and personal needs. If required, sit down with us to consider potential changes or restructuring to start the new financial year off right.

9. Deductions and allowances: Review all eligible deductions and allowances for your business, such as depreciation, associated home office expenses, motor vehicle expenses, and other legitimate business costs. Ensure you have accurate records to support your claims. If you use a cloud based accounting program, attached the invoice or receipt to the transaction in your program. This will save time down the track if accountants need to see documentation.

10. Keep up with any relevant legislative changes: Stay informed about any changes in tax laws or regulations that may affect your business. We will consult with you and provide resources to assist you to stay up to date.

11. Talk to us and seek our professional advice: If you’re unsure about any aspect of your tax obligations or need assistance with complex matters, consult with your Larkin Partner tax accountant. We can provide tailored advice based on your specific circumstances.

Remember, this checklist provides general guidance, but individual circumstances may vary. It’s crucial to consult with us to ensure your compliance with the our tax system and to address any specific concerns related to your business and personal tax affairs.

The next of our Blogs to provide your tips and support for your end of financial year preparation.

End of financial year is a big time for all businesses, so it pays for you to be organised and have a very clear idea of what you need to be doing now and in the last days leading up to June 30^th, so you can close your accounts for the 2022/2023 year without the pressure. 

The official date of the End of Financial Year is the 30th of June 2023. From midnight on the 30th of June your business accounts will be closed off for 2022/2023 year and all transactions after that date will then make their way into the 2023/2024 financial year. 

This blog is a to be used as a prompt to tick off your list of to-do’s so you can finish the financial year strong and be ready to go for next year.

Let’s start with Payroll. Payroll needs to be reconciled by the 14th of July 2023. You can submit your EOFY finalisation declaration via Single Touch Payroll (STP) which then allows your employees to complete their own income tax returns.  It is important to review all related payroll transaction and ensure your profit and loss payroll and super amounts match your payroll reports. Once you are happy that the ledgers equal,ensure that your STP Year End report matches your ledger reports, and if it does, then finalise and process your Single Touch Payroll report to the ATO.

Next let’s look at Superannuation. For your Super expense to be claimed in the current financial year, it needs to be paid and cleared by the 30th of June. It is important to make sure all employees Super Fund’s are active and that you pay their contributions as early as possible to ensure they hit their super accounts in time. Aim to have your final super paid by 21^st June, to ensure it is in our employee accounts by June 30^th.

Let’s now talk record keeping.  Making sure you have supporting records of all expenses to you are claiming as deductions in your accounts and that you are fully and accurately recording all income earned is really important. These ‘supporting records’ can be kept digitally or as paper records and need to be supplied to your accountant. Ensure you keep receipts, invoices, any dividend statements and records of sale of assets.

Tax planning. Tax planning is a smart move for your business to consider before EOFY, and before heading into the next EOFY. For most businesses and individuals income tax is one of our largest expenses, so it does require careful planning and budgeting. With a good tax plan, and an accountant on your side, working smarter with your tax strategies can save you some cash.

BAS and FBT Lodgements. Make sure these are done and all up to date.

We hope this helps you get over the finish line for the 2022-2023 financial year. It’s been a big year with issues in the economy affecting all businesses, employee shortages for some business and the many other changes to business and everyday life. If you are looking for an accountant to help you meet all you taxation compliance needs this tax time, or you are looking for some business advice to help you with your tax plans, reach out to us at the office, we are here to help you.

Preparing your business and personal End of Financial Year (EOFY) information can often feel stressful. There are invoices, purchase orders, bank statements and receipts to sort out, reports to review, and you need to make sure you have all the necessary information about your income and expenses. It can be overwhelming, and it can make the EOFY feel intimidating.

The end of the financial year is not the time to be collect receipts and find invoices, however. It is also a time to reflect on how your past year went, what went well and what didn’t, and what you can change for next year.

Here are three pre 30^th June tips so you can make the most of your end of financial year.

1. Look at your Admin

One of the most overwhelming parts of the end of the financial year is finding all the invoices, receipts and reports you need so you can properly prepare your business and personal returns. Pay attention to how easy it was—or wasn’t—to find what you needed his past year.

Did you have to search 15 different places for all your receipts? Did you have a combination of online and physical invoices? Did you have clearly labelled folders for everything? Did you leave everything for the last minute?

If you found yourself searching high and low for every piece of paper you needed, you might want to consider revising your paperwork so it’s easier and less time consuming to manage.

Can you keep track of everything through our accounting software and apps? Is there technology or equipment that can help you? Is it worth investing in a VA to manage your filing cabinet?

The effort you put now into sorting your paperwork will pay off hugely every year when you can quickly and easily find all the information you need. Let’s face it, you’ll come up against the end of the financial year every year so you may as well be systematic about it.

2. Reflecting on your year

This period prior to end of financial year is a perfect time to reflect on how this 2022/2023 year went. Celebrate your business’ big wins, but remember to focus on other victories as well. Even if you didn’t meet your financial targets, did your business survive this particularly tough year – post pandemic re-awakening, inflationary pressures, etc? Did you manage to pivot your business and try a new model? Did you take some risks and learn from them? Did you grow your business or expand your offerings?

It is great to have goals for each year and celebrate when you achieve them, but it’s also important to look at where things didn’t go according to plan and how you grew from those situations. You may need to refine your business plan if you’re not meeting your financial targets, or rethink how your business is expected to arrive at its goals in the first place.

Do this before you start planning the 2023/2024 year ahead, so you can revise your strategies going forward.

3. Planning for the future

Now that you’ve reflected on what went well and what went sideways this financial year, you can better plan for the 2023/2024 year. Research upcoming events in your business sector and schedule your marketing calendar. Plan ahead to address those slower times or to ensure you have the logistics to cope with the busy periods. 

If your business didn’t meet its financial targets last year, either change how you set your goals or your strategies for achieving them.

Many businesses offer discounts at the end of the financial year. Does it make sense for you to make a purchase right now? Should you buy new equipment, technology or other goods at this time? It may actually be worth it, if you have the money to do so and you need those items.

Although the end of the financial year can feel stressful, it’s also a fantastic time to reflect on the past year and celebrate your achievements. So, once June 30^th hits, make sure you can take the time to plan ahead and incorporate the lessons you learned from the past year to make the upcoming year your most successful.

On February 16 2023, the ATO announced major changes to how you can claim home office expenses in your 2022/2023 tax return.

With these changes you may need to adjust your record keeping, because it is becoming more stringent.

What’s changed with record keeping for my 2023 tax return?

1 July 2022 – 28 February 2023:

The ATO states you must keep a record that is “representative” of the total number of hours you worked from home between 1 July 2022 and 28 February 2023. This is basically the same as what you usually need to do when claiming work from home expenses.

BUT – Changes from 01 March 2023 onwards:

You must keep a record of the actual hours you worked from home between 1 March 2023 and 30 June 2023. No estimates will be accepted.

• You must record these hours regularly, throughout the year, using one of the following methods:
  • Timesheets
  • Rosters
  • Employer system logs or online business systems
  • Time-tracking apps
  • A regularly updated diary, calendar, logbook, spreadsheet, or similar document

You must keep a record of the home office running expenses you paid for and that relate to your hours worked at home.

Records you should keep include:

• For power, gas, home phone, mobile and internet expenses, you should keep your bills/invoices (monthly or quarterly).
  • If bills are not in your name, you must show evidence of the expense, such as a joint credit card statement or joint property lease agreement, to prove that you share these expenses with someone else.
• For occasional expenses, such as stationery, paper or printing ink, keep your receipts for any work-related purchase made.

Other changes to home office expenses in 2023

• The rate per hour you can claim has increased from 52 cents per hour to 67 cents for each hour you work from home.
• You no longer need a designated working area or home office.

On the surface that looks like a win, but when you look a little closer, there are some downsides.

The fixed rate of 67 cents per hour now INCLUDES some expenses that you used to claim separately; that could mean less money for you. 

In 2023 you can no longer claim these items individually, IF you claim the 67 cents per hour:

1. Internet expenses
2. Home and mobile phone expenses
3. Electricity and gas used for heating, cooling and lighting
4. Stationery and computer consumables

So, what home office expenses can I claim IN ADDITION TO 67 cents per hour?

Most of the common separate deductions are off the table, but there are a few extra deductions you can still claim while also claiming the 67c per hour in 2023:

1. Depreciation of assets that cost more than $300 such as office furniture, computers and mobile phones.
2. Expenses for work-related purchases up to $300, such as desk chairs and monitors.
3. The cost of cleaning your home office and repairing office furniture.

When does the new rate for home office expenses start? The fixed rate changes were only just announced but they come into play on 1 July 2022. That means these changes to home office expenses will apply to your 2022-23 tax return.

Will this mean you will get less money back at tax time? Most likely. Historically, claiming each of your work from home expenses separately has led to a larger deduction claim and a bigger refund. With the ATO rolling most of those expenses into the one 67c rate, it’s likely your home office expenses claim will be smaller in 2023. But there is is a sliver lining – there is another way to claim work from home expenses in 2023.

It’s called the “Actual Cost Method”. Using this method to claim home office expenses in 2023 means you don’t claim 67c per hour, and instead all of your expenses are claimed individually. These include:

• Electricity and gas
• Home and mobile phone expenses
• Internet expenses
• Stationery and computer consumables
• Cleaning your home office
• Depreciation on office equipment that cost more than $300 (E.g computer desk)
• Office equipment that cost less than $300.

To use this method, you must keep either:

• A continuous 4 week diary that tracks your usual pattern of working from home, or
• A full 12-month record of the total number of hours you worked from home during the year.

Then for each deduction you claim using the actual cost method, you specify how much of the item’s use was for work purposes.

So, which method is best for you?  This will depend on your personal circumstances. For many people the actual cost method will lead to a larger deduction, but some will find the new 67c per hour works out better.

Reach out to your accountant at Larkin Partners to discuss which will be the best method for you. The most important thing for you to remember is the strict new requirements for record keeping, especially tracking the hours you work from home across the year in a calendar or diary.

It’s getting close to that to that time of the year again. So, why should you, as an employer, lodge a Fringe Benefit Tax (FBT) return where no FBT is payable? 

For the simple reason that it turns on the three-year deadline for the ATO to commence audit activities on your business ongoing.

Samples of fringe benefit items include:

• allowing an employee to use a work car for private purposes
• giving an employee a discounted loan
• paying an employee’s gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by an employee, such as school fees
• giving benefits under a salary sacrifice arrangement with an employee.

Without an FBT return being lodged, the ATO has the discretion to launch an audit into activities as far back as a business has had employees – past, current and future. Without the evidence (e.g. signed declarations, logbooks, meal entertainment records, etc.) that FBT was NOT payable in each year the ATO is likely to raise FBT liabilities, even where the employee who enjoyed the benefit no longer works for the business. Thereby making it impossible for the business to recoup anything from the past employee.
 Where you believe you have done everything in accordance with legislation, people can make mistakes. A common error made is where an employee is provided with a car and the private use is worked out using the operating cost (logbook) method. A part of using the logbook method is working out deemed depreciation each year and many accountants overlook this or work it out incorrectly by relying on the depreciation claimed on the business’ financial statements. This mistake can give rise to an FBT liability where the calculated employee contribution is insufficient to remove the car’s taxable value.

If a mistake like this is identified the ATO is likely to review the entire period that the car was owned by the business. Lodging an FBT return would limit the length of time the ATO can audit the business to three years.
 

Another common mistake is not maintaining a register of which employees are the recipient of meal entertainment benefits. Not all meal entertainment benefits are treated the same which is why you maintaining a register is vital.

Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the FBT they pay. Employers can also generally claim GST credits for items provided as fringe benefits.

There is no separate fringe benefits tax (FBT) category for Christmas parties as fat as the ATO are concerned, and you may encounter many different circumstances when providing these events to your current staff, past and future employees and their associates (wives and kids).

“Exempt property benefits”

So, this one is probably the easiest to understand – the costs (such as food and drink) associated with your work Christmas party is exempt from FBT if is is held on a working day, on your business premises and consumed by your current employees. The property benefit exemption is only available for employees, not associates. For associates – keep it under $300.

Exempt benefits – minor benefits – $300 threshold

The provision of a Christmas party to your employees may be considered a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300.The threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits.

Gifts provided to employees at a Christmas party

The provision of a gift to your employees at Christmas time may be a minor benefit that is an exempt benefit where the value of the gift is less than $300.

Where a Christmas gift is provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.

Tax deductibility of a Christmas party

The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction.

The costs of entertaining clients are not subject to FBT and are not income tax deductible.

Christmas party held on the business premises

A Christmas party provided to current employees on your business premises or worksite on a working day may be an exempt benefit. The cost of associates attending the Christmas party is not exempt, unless it is a minor benefit.

As you head into the silly season, you have time to reflect over the year, here are some things we things you should create a checklist to think about during your break

Tax Planning

We like take a pro-active approach to work with you to conduct end of year tax planning before 30 June 2023. This gives you an insight into your likely tax situation before hand as well as to plan ahead for the coming year to give them the best returns possible.

GST/PAYG/FBT/Superannuation

Are you on top of your regular ATO compliance lodgements? Do you need some support to prepare your monthly or quarterly Business Activity Statements (BAS) or your Instalment Activity Statements (IAS) for you – is this weighing you down? We can help lodge them for you or offer you some training to teach you how to prepare them yourselves to make you more accountable to your business. We believe this gives you a better insight into how your business is performing.

Capital Gains

Thinking you may sell your business in 2023 and concerned about the potential capital gains tax implications? It is a complex area, and the laws surround this can be very confusing. We can talk you through and review the relevant SBE Concessions eligibility for you when selling a business, to achieve the best possible results for you. 

Should you really consider using some Accounting software ongoing?

We can assist here providing you some details about what software may work best for your needs, but whilst you have that extra time over your break you an take a look at Xero & MYOB Business cloud based software and thinking what may work best for you and your business. The benefit of using accounting software in the cloud is that we can help you out during the year without the need for posting or emailing back-up copies of accounting files. Issues can be handled promptly (usually while you are on the phone to us), and feedback can be given as to the correct way of handling future issues.

Start up a new business – think about setups and restructuring

Too often we see clients with the wrong structure for their business. This can result in larger than normal compliance fees (too many entities), hidden costs, high tax bills, and open the client up to litigation if trading under the wrong entity. Most clients aren’t even aware of the type of structure they have, and why they have it that way. We are advocates on your accounting education. We will review your business structure and provide advice on our recommendations for you. We will also chat with you why your structure is the best structure for your business needs or if you need to consider a change. We can also set up your new entity on your behalf and make the whole process as easy as possible.

So, while you’re looking to kick back over the break, we’ve given you some thinsg to be considering around you business. Whilst we will close over that Christmas/New Year period, we’ll be back on deck early January, so we can chat to you over the phone if necessary, from your poolside deck of course.