It’s the end of the financial year which means it’s time to draw out those annual reports and financial reports.
If this is your first year in your electrical business then you don’t have to panic.
We’ve created a list of advice for electricians that’ll prepare you for the tax season and make sure you survive it and learn a little bit more for next year.
It might seem like the due dates for submitting your taxes are far off but it’s always safer to be clear on what your tax liability is.
Not only will you be able to budget the amount required but you’ll be prepared to lodge at a time that is comfortable for your business.
If you don’t already have an accountant at hand you can outsource one that will identify the lodging dates for your electrician businesses.
Stay On Top of Records
You’ll quickly learn that every single receipt that belongs to your business is gold.
Tax deductions are a reality that can easily save you from paying huge amounts of tax. By recording and keeping proof of all your daily transactions, you’ll have the evidence in paper required by the ATO in order for you to claim a deduction. They mostly require information regarding your income. Keep in mind that this won’t only be picked from the revenue your business is making.
Other sources of income
- Government payments and allowances
- Foreign income
- Business, partnership, and trust income
- Investment income (this includes dividends, rent, interest, and capital gains tax)
- Other income such as deductions, compensation, and insurance payments, discounted shares, and others.
For a thorough view of income declarations refer here.
Sometimes, you won’t automatically get receipts for transactions so you’ll need to request one to make sure you’re not missing out on anything. All this probably sounds like a ton of work on top of your usual electrician routine which is why you should never shy away from outsourcing whenever needed.
Tradies Accountant exists for the very purpose of helping ease the burden of keeping up with tax compliance and bookkeeping. Book a consultation whilst there’s still time. And don’t worry, we keep jargon out of the office.
Instant Asset Write-Off
It’s a great year to be a small business in the tax world for a couple of reasons but the instant write off will soon become your new favorite.
The newly set instant asset write-off will help you gain much-needed capital assets for your business along with reducing your taxable profits.
Even better is how generous they’ve made it this year. Apparently, assets that cost up to $150,000 will now be written off immediately (before it was $30,000 up to 11 March 2020). The $150,000 limit applies until around 31 December 2020.
To top it off, more businesses will be able to make a claim as the turnover limit went up to $500 million from 12 March 2020 (the previous limit was $50m).
Items up for claim include:
- Cash registers and other POS devices
- Cars, vans and trucks
- Fittings and fixtures for your place of business
- Machinery for your work
- Computers, laptops and tablets
- Security systems
- Accounting software
Do make sure you comply with the ATO rules before attempting to claim any of these.
Remember Your Super
Contributing to your super is a wise financial decision.
It’ll give you the allowance to save on the amount of tax you’ll have to pay by maxing ‘after-tax’ contributions.
You can also make contributions of up to $25,000 in this financial year and greatly increase your super balance.
And if you’re already wondering then yes, contributions to an employee’s fund should also be deductible. Employers legally have to contribute to employees’ super under the superannuation guarantee laws.
Chances are you’re feeling super overwhelmed by this already but an accountant can quickly sort out all your financial legal affairs. It’ll save you time that can easily be distributed to growing your business.