It might not feel like it, but 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 various policies, laws and rules come into effect in the wake of the Covid-19 pandemic.
With this in mind, you need to make sure your books are in order and be prepared for the 2022 end of financial year!
Of the many questions you might have, here are 12 questions worth asking your lawyer before the end of financial year gets underway.
Different questions to ask your lawyer
Let’s go through the key questions you should ask your lawyer before the end of financial year to ensure everything is covered.
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 business structure is the best fit for your business.
If you find that you’ve been paying high amounts of tax as a sole trader, now might be the right time to switch to a company structure.
Changing to a company structure can be a good option if you want to maximise your profits, and a lawyer can help you determine whether now is the right time to change.
2. What can I claim?
Inarguably the most common question lawyers receive when it gets towards the end of financial year is the way business owners should look at ways to maximise their deductions.
As a business owner, there’s a lot of tax deductions you can claim as long as they directly relate to earning your income.
For example, as a small business owner in Australia, you may be able to claim deductions before the end of financial year if:
- Your business has a website
- You have a company car and motor vehicle expenses
- You use diesel fuel
- If you operate at home
- Incurred any travel expenses
- Your business has used computers, tools and machinery
One thing to be mindful of when speaking to your lawyer is that you need to have records (emails or receipts) to prove the expenses that you claim as business deductions.
3. What business products and services are tax-deductible?
Many business owners aren’t aware that there’s a raft of tax-deductible products and services. For example:
- Service fees for accounting and bookkeeping
- Legal services fees
- Lawpath products such as the Legal Advice Plan
It would be worth discussing other tax-deductible things with your lawyer to help you claim it correctly.
4. What does the 2022-2023 federal budget changes mean for my business?
The recently released 2022-2023 federal budget introduced many updates that may impact your small business preparing for the end of the financial year.
Some announcements in the budget you might want to ask your lawyer about are:
- Small business technology boost – if you’re a small business with less than $50 million in annual turnovers, you’ll be able to deduct an additional 20% of the cost incurred on your business expenses that support your digital goals
- Skills and training boost – 20% deduction for external training courses your business provides to employees
- Australian apprenticeship incentive system – your small business will be awarded $15,000 in wage subsidies if you hire tradies
- PAYG system – makes completing your taxing obligations and business administration tasks much easier
- Instant asset write-off extension – Encourages small business investments to fuel their growth and fund new purchases
5. How can I recover any 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 them.
Your lawyer can advise on the correct process to follow. For example, you have the option of:
- Check contract terms to see when payments are due
- Contact the customer in writing to request payment
- Set up regular payment reminders
- Issuing a letter of demand if they don’t respond to your requests
- Your lawyer could advise going through dispute resolution and negotiations to get the money back
- Lodging a claim in court
6. What are my legal requirements if one of my employees asks for a pay rise?
The end of the financial year has traditionally been the time when many employees receive pay rises due to new budgets and forecasts.
If you find yourself asked this question, it’s a good idea to talk to your lawyer about:
- How to find the financial room to give the pay rise
- What you can offer going into the 2023 financial year if you have to say no
- How are your employees’ pay calculated — For example, hourly rate, fixed fee, no win no fee, salary
7. Is Government assistance still available if my business is struggling?
Many government programs were introduced in 2022 to help with the impact of Covid-19 across NSW and other states.
The good news is that the Australian government still has some initiatives to assist your growing business. It’s a good idea to discuss the following opportunities with your lawyer.
1. Small Business Fees and Charges Rebate NSW
This rebate is available for sole traders, businesses and not-for-profits. This rebate aims to help business owners recover from the impacts of Covid-19 and continue to grow by reducing the costs associated with running a business.
Here is everything you need to know:
- Closing date: 30th June 2022. You can apply here
- Rebate: Up to $3000
- 1. Have total Australian wages below the NSW Government 2020-2021 payroll tax threshold of $1.2 million
- 2. Have an Australian Business Number (ABN) registered in NSW (Include your phone number)
- What can the funds be used for (Including but not limited to):
- Offset food authority licences
- Liquor licences
- Legal documents
- Tradesperson licences
- Outdoor seating fees
- Council rates
- Road user toll for business use
- 50% of the cost of Covid-19 rapid antigen tests (RATs)
2. Small Business Digital Adaption Program (VIC Grant)
The Small Business Digital Adaptation Program is a $20,000,000 program that the Victorian State Government has introduced to help Victorian small businesses trial new software, improve their online capabilities and transition to a digital way of doing business.
Lawpath is proud to partner with the Victorian Government to help businesses adapt to the digital operating environment and prepare for COVID Normal.
Eligible Victorian businesses will receive a rebate to cover 12 months of access to a Lawpath legal plan through this plan.
8. How far ahead should I plan?
There’s no doubt that planning ahead is always wise. However, it’s essential that you don’t want to plan so far into the future. Here are some reasons why
- You won’t be able to adapt to changing circumstances — changing business trends, economic variations, e.g. interest rates
- There are always legal changes — varying tax returns and superannuation requirements
- You may introduce different elements to your business – family trusts, discretionary trusts, estate planning
- You may use different providers in the future
Your lawyer can advise how far ahead you should plan your business requirements.
9. What’s the best way to maintain my records?
Accurate record-keeping goes a long way when it comes to the end of financial year.
Some recommendations include:
- Prioritising security and privacy
- Record, track and monitor documents
- Annually review and audit
- Ensure your records are correct and efficient
- Digitise physical records
Your lawyer can provide further 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. The most recent changes to tax laws for small businesses are:
- Covid-19 tax deductibility for RATS — RATS used to test Covid-19 for work purposes will be tax-deductible
- New Client Identify Verification Guidelines — If you’re a tax practitioner, the ATO have created new guidelines that you must follow when you verify the identity of any new clients
- Family trust tax changes — The ATO has issued the Taxpayer Alert to target parents who try to benefit from the lower tax brackets of their children aged over 18
- Business Vehicle Tax Deduction — As a small business owner, you can claim tax if you buy a ute or vehicle for work purposes, e.g. Delivering your business’s products and services
It’s worth checking with your lawyer whether there are further updates that will impact your business before the end of financial year.
11. What documents do I need to give employees?
Although most employers now legally have to use Single Touch Payroll, some may still have to issue group certificates to employees.
Generally, you need to report payments made to your employees to the ATO, including:
- Salaries and wages
- PAYG withholding
- Reportable fringe benefits
It’s worth checking with your lawyer what information you have to report to ensure your employee’s information correctly loads into their online income statement.
12. What tax or accounting practices should I follow?
Being organised is vital for the end of financial year. You can choose to keep your records organised electronically or in paper form.
Here are some tips to follow depending on what practice you choose:
- Manual bookkeeping — Manual bookkeeping systems use a series of books or ledger accounts
- Electronic bookkeeping — The ATO is moving towards all electronic records, so it may be an excellent time to go electronic
- Accounting software — Tailored accounting software can help you record your transaction, calculate GST and generate invoices
Your lawyer can recommend which record-keeping system would be best suited to your business’s requirements so you can stay on top of everything come tax time.
Frequently Asked Questions – FAQs
What date is end of financial year 2022 (What is the date for FY22)?
The date for end of financial year 2022 is 30 June 2022.
How many days are there in the financial year?
A commercial year is 360 days. It is composed of 12 months of 30 days used by some businesses to track changes in accounts internally.
The end of the financial year is fast approaching, and being organised is key. Here’s a quick recap of the 13 questions you should ask your lawyer this EOFY:
- Is now the right time to change business structures?
- What can I claim?
- What business products and services are tax-deductible?
- What does the 2022-2023 federal budget mean for my business?
- How can I recover any money owed to my business?
- What are my legal requirements if one of my employees asks for a pay rise?
- Is Government assistance still available if my business is struggling?
- How far ahead should I plan?
- What’s the best way to maintain my records?
- Are there any changes to tax laws I should be aware of?
- What documents do I need to give employees?
- What tax or accounting practices should I follow?
And, if you need any further assistance to prepare for the end of financial, you can hire a lawyer with Lawpath who can assist.