With the end of the tax year fast approaching, now is the time to take a good look at where you stand with your business loans.
Chances are there could be steps you should be taking right now to optimise your opportunities for the new financial year ahead. So how can you make the end of financial year less taxing?
The big news in 2009 was the federal government's Investment Allowance, so if yours was one of the larger companies which took advantage of the 30% investment allowance, the end of tax year is your final deadline. If you have pre-ordered vehicles or equipment prior to June 30 2009, you must ensure they are installed and ready for use by June 30 2010 in order to claim the 30% investment allowance.
Here's a word of caution with regard to financing structures. Specialist business finance broker Finlease advises that you should fund your purchase with an 'Equitable Chattel Mortgage', otherwise you run the risk of having your investment allowance claim disallowed.
Even if you're not looking at claiming the allowance, there are measures you can take to minimise your tax liability. For small business turning over less than $2million, there may be an opportunity to pre pay up to 12 months interest on your loans, and therefore claim that interest against your profits this financial year. Naturally you should only consider bringing forward such payments if you have a good balance sheet and have adequate cashflow to meet your existing needs.
Indications are that the economy has definitely turned the corner, and as the economy turns up, so does business. So if you are considering upgrades to any of your equipment to equip your business for the upturn, be sure to act before June 30. Yet the unfortunate aftermath of the global financial crisis is that access to credit is much more difficult for small businesses. The major banks have tightened their lending criteria considerably, so it is a good idea to have a specialist finance broker who is up to speed with the latest bank requirements. Your broker will prepare your application correctly to ensure the loan goes through by the June 30 deadline.
Now is a good time to put financial approvals in place in anticipation of end of financial year deals for equipment suppliers and vehicle dealers. Talk to your broker now about setting up a facility in anticipation of possible expected and unexpected opportunities which may come along.
Naturally you should also talk with your accountant well before June 30 to ensure you know what other implications the end of tax year may have for your business. This article has been prepared by specialist finance broker Finlease, more tips and advice can be found at www.finlease.com.au.