It might be stating the obvious, but the less profit your business has, the less tax you pay. And in order to keep your tax bill to a minimum, it’s important to include all your legitimate business costs as tax deductions; the best type of business cost is one that also adds value to your organisation. If you have to be out of pocket, it’s more beneficial if that expenditure improves your production capabilities, the quality of your products or services, your presence in the market or the capacity of your team.
In other words, if you are spending money on your SME, aim to do it in a way that not only minimises your taxes but benefits your business capabilities at the same time.
To help small and medium-sized business owners continue to drive the economy forward, the government has provided a range of new concessions that are worth taking advantage of. A specialised lender like lumi.com.au can help you get the necessary funds to invest in your business while also allowing you to reach your optimum tax/profit ratio.
At Lumi.com.au one of our central goals is to give insights that could help SMEs improve their chances of success; in that line of thinking, here are two options that may help you reduce your business taxable income and therefore your tax bill.
Lumi is an online unsecured business loan provider, you can learn about their multiple options and the team behind the name at lumi.com.au.
- Instant Asset Write-off
As announced by the 2021 Government Budget, until June 2023, businesses that qualify on a specific turnover threshold can access the Instant Asset Write-off benefit; that’s great news when it comes to improving your business capabilities while optimising your tax payments in the short term. (Source: ATO.)
In essence, the Instant Asset Write-off incentive simply allows businesses to claim deductions upfront, rather than spread it over several years through depreciation. Let us be a bit more specific about this topic and answer the bottom-line question of “What is a business asset?”. In short, an asset is a business’s physical and financial resource; they are grouped into the following categories:
- Tangible (e.g. tools, technology, business vehicles).
- Current/Fixed (e.g. buildings, heavy equipment).
- Intangible (e.g. software, intellectual property).
Investing in assets for your SME will allow you to quickly increase your capabilities and minimise your taxable income in the future, but if you don’t have the necessary funds to make such an investment, a good way to take advantage of the Instant Asset Write-off is via an unsecured business loan; this will provide you with the financial flexibility and the advantage that you need.
Lumi.com.au offers unsecured business loan options; up to $150,000 that could be approved in 24 hours and help you make the most of the Instant Asset Write-off allowance.
- Tool Upgrade and Maintenance
Buying new work equipment or upgrading your existing business tools with an unsecured business loan are effective ways of spending money while earning a tax benefit. Tools of trade such as computers, software and protective equipment are things you can buy for your SME that can then be added to your deductions while adding value to your business.
Equally, using an unsecured business loan to invest in repairs and maintenance of work tools and equipment is a way to add value while reaching a better tax payment threshold. The machine that keeps rattling, the fridge that drips, the ute in need of a service, the oven requiring new parts, the showroom renovations you’ve been thinking about… these can all be solved by an upgrade or some maintenance. Not only will that improve your business’s performance, but those types of purchases or repairs will also help with your tax optimisation strategy.
If liquidity is a problem and you need an injection of cash to allow you to carry out purchases or maintenance, it’s worth considering an unsecured business loan, especially one that can offer extra flexibility and that is provided by a lender with the ability to understand your business.
What are you waiting for? Apply online for an unsecured business loan; up to $150,000, with the option to receive the funds on the same business day in order to make the most of the EOFY Instant Asset Write-off. Check out lumi.com.au for our latest EOFY offer.
* *This content is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.