With the financial year well and truly here, many small business owners may be gearing up for the next 12 months by jotting down a new set of financial goals and targets.
But the one thing many owners may not be prepared for are four new tax changes that came into effect on July 1 that could impact the way small business owners run their business and their next tax return.
“Being aware of these regulatory changes and how they can affect you and your business, may assist in the smooth operation of your business and help you maximise your return,” said Chartered Accountants Australia and New Zealand Senior Tax Advocate, Susan Franks.
So if you’re an Aussie with a small business, here are four tax changes you need to be aware of this upcoming financial year.
Rolling over to single touch payroll (STP)
From July 1, 2019, all employers are now required to report their employee’s tax and superannuation details through STP. Many businesses across the country have already implemented the STP system, which according to the ATO, sends a report of an employee’s salary, PAYG withholding and super information.
If you anticipate that your small business may need more time to get ready to transition to the new STP system, you are able to access various concessions, like lodging deferral to September 30.
Cash wages deduction restrictions
Business owners who pay cash wages to their employees but fail to report these payments or send back the tax associated with cash wages will no longer be allowed to claim a tax deduction on cash wages. It’s hoped that this change will help businesses compete fairly.
Lowered company tax rate for active small businesses
The company tax rate for active small businesses will decrease from 27.5% to 26% in the 2020/21 financial year, before lowering further to 25% in the 2021/22 financial year.
Using the instant asset write-off
Until June 30, 2020, businesses will be able to make new or second hand asset purchases under $30,000 and immediately claim a deduction. That’s why it could be important to start considering what new assets your business will need to thrive in the new financial year. Of course, not every small business owner has $30K up their sleeve, so if you are keen to give your business the boost it needs, you may want to consider taking out a business loan.
Not sure what makes a great value business loan? Check out our tips below.
How to find the right business loan for your business
Shop around on interest rates - Unlike a car or home loan, business loans look a little different. When you start shopping around for business loans, you may see a lender advertise their rates on a weekly, fortnightly or monthly basis and some don’t advertise rates at all. This could be because the lender will offer you a customised rate after you apply. While there is no right offer, you’ll need to consider which rate will work best for your business.
Watch out for fees - Although a low rate is important, business owners should also be wary of various fees attached to business loans. These could be application, valuation, ongoing or exit fees as well as late payment fees. Depending on the lender, these could hit the thousands of dollars, so be sure to do your research before signing the dotted line.
Be mindful of handy features - Similar to a home loan, a business loan can come with some handy features that can help you pay off the loan faster, such as flexible repayment options.
Know what you need to apply - Most lenders will have different application processes and can ask for a range of details, so make sure you have all your business and personal information ready to go when you apply. This will help ensure a smoother and faster application process, which can come in handy if you need the cash fast.
Ready to start shopping around on business loans? Then make your next stop our business loans comparison tool or check out some other great offers down below.