The end of the financial year is fast approaching, which means it’s time to start getting your finances in order. The past financial year has seen an array of different policies, laws and rules come into effect in the wake of the COVID-19 pandemic. While many of these changes have reverted to pre-pandemic rules, there’s always issues which are best to clarify with your lawyer. In this guide, we’ll explain what you should ask your lawyer before the 2022 Financial year gets underway.
1. Is now the right time to change business structures?
There’s no better time to take stock of your business than towards the end of the financial year. A big part of this is assessing whether your current structure is the best fit for your business. For many business owners, the costs of paying tax at individual rates and being financially liable far outweigh the benefits. Changing to a company structure can be a good option if you want to maximise your profits throughout the 2022 financial year.
2. What can I claim?
Inarguably the most common question lawyers receive when it gets towards the end of June, business owners should look at ways they can maximise their deductions. Whether for your business or your individual income (if you’re a sole trader), there’s lots of things you can claim. For corporate entities, some key policies to be aware of are:
- The JobMaker Hiring Credit
- Instant asset write-off
- Loss carry back
For your personal income, it is worth asking your lawyer about:
- Work-related expenses
- Working from home
3. What does the 2021 Federal Budget mean for my business?
The recently released 2021 Federal Budget says a lot about the Government’s plans for Australia’s economic recovery. Notably, the priority is to get Australians in jobs and ease the burden on businesses. Some announcements in the Budget you might want to ask your lawyer about are:
- Corporate tax cut for SMEs down to 25% (currently 27.5%)
- Temporary loss carry-back provision
- $1.2 billion to fund Australia’s Digital Economy Strategy, which will aim to get more businesses online and adapting to new technologies
- Extension of temporary full expensing to the end of June 2023
- Corporate deregulation funding
- Extension of the small business loan scheme
4. What business products and services are tax deductible?
Although similar to our first point, there’s a raft of products and services that many people aren’t aware are tax deductible. This includes service fees for accounting and bookkeeping, and even legal services fees. In fact, you can claim a deduction for products such as our Legal Advice Plan. A lawyer can help you ensure whichever service you use is tax deductible and help you claim it correctly.
5. How can I recover money owed to my business?
Having debts owed to you can be frustrating, but you have to be careful with how you go about recovering it. Your lawyer can advise on the correct process to follow, from issuing a letter of demand to lodging a claim in Court. Temporary extensions and reductions in the amount you can commence proceedings to recover have since ended, meaning that pre-COVID debt recovery laws are in place again.
6. What are my legal requirements if one of my employees’ asks for a pay rise?
EOFY has traditionally been the time when many employees receive pay rises, due to new budgets and forecasts. However, pay rises stalled over the past year. If you find yourself asked this question, it’s a good idea to talk to your lawyer about how to either find the financial room to give the pay rise or what you can offer going into the 2022 Financial year if you have to say no.
7. Is Government assistance still available if my business is struggling?
Many Government programs introduced in 2020 to help soften the blow of the COVID recession have now come to an end. However, there’s still programs available- especially within States such as Queensland and Victoria. One great example is the Victorian Government’s Small Business Digital Adaptation Program, which reimburses eligible businesses for digital subscriptions which help them manage their business.
8. How far ahead should I plan?
Planning ahead is always smart, but you don’t want to plan so far into the future that you can’t adapt to changing circumstances. Your lawyer can advise on how far ahead you should plan your budgets and account for expenses such as tax, salaries and general administration.
9. What’s the best way to maintain my records?
Accurate record keeping goes a long way when it comes to EOFY. Your lawyer can provide some recommendations on how your books should look all year round, and how you can maintain them.
10. Are there any changes to tax laws I should be aware of?
Tax laws tend to change fairly frequently, particularly in light of the pandemic. It’s worth checking with your lawyer whether there are any updates that will impact your business.
