Independent retailers are well-known for not only their creativity and dynamism, but their resilience, work-ethic and ability to tackle any job, from finance and sales, to admin and HR. That has perhaps never been more evident than over the past few months.
In any normal year, their ability to juggle ordering stock, maintaining the books, managing staff, and above all, ensure the business remains profitable, is one to be admired.
If you’re a retailer, those skills are going to come in handy now, as you prepare for your first post-lockdown tax return, a new financial year and the opportunities that the new retail spring could bring.
If not properly managed, tax time can cause headaches and stress at a time you need to think clearly and operate efficiently.
However, by getting organised early and developing good habits, the end of the financial year can become less of a worry and more of an opportunity to reflect on the previous 12 months and plan for the year ahead. So, here are a couple of things to consider this tax season:
Identify the updated incentives and deductions you’re eligible for
Many retailers will be aware that you can claim deductions on a number of business-related expenses such as large business assets, travel, stock purchases and employee entitlements.
However, in response to the coronavirus pandemic, the government has introduced and updated a number of deductions to provide a little extra financial assistance for business owners.
Before you get started, it’s probably best to understand what they are, whether you’re eligible and how to benefit.
The first is the increased value of the instant asset write-off threshold, allowing for immediate deductions on the business portion of the cost of an asset in the year it is first used, or installed ready for use.
This threshold has been increased from $30,000 to $150,000 from 12 March 2020 until 30 June 2020, while eligibility has also been expanded to cover businesses with an aggregated turnover of up to $500 million, meaning more businesses might find themselves eligible for this deduction.
So, if you’ve invested in a new CCTV system or redecorated your store during that period, for instance, be sure to include it in your tax return.
In addition, any JobKeeper payments you’ve relied on to retain employees during the shutdown are taxable income, while staff wages are deductible.
The government also introduced a shortcut method for calculating additional expenses incurred while working from home.
So, if you found yourself working from home more than usual during the peak of the pandemic, you can claim 80 cents per hour for additional expenses incurred, such as electricity, phone and internet, and home office equipment, from 1 March 2020 until at least 30 June 2020.
Make accurate records your best friend
Unless you have extensive accounting knowledge, understanding the tax system can be daunting, but keeping accurate, up-to-date records should make it much less confusing.
If you haven’t compiled accurate records for the last financial year yet, start by creating a profit and loss statement, which is a summary of your income and expenses.
Any expense that was incurred in relation to running your business is likely assessable for tax purposes, so if you’re unsure, include it.
Next, carry out a physical stocktake and compare it with your digital inventory to ensure it’s up-to-date and accurate. Be sure to keep records because you may be eligible for deductions.
On top of that, when you file your tax return, you’ll also be asked to divulge figures relating to things like debtors and creditors, asset purchases and expenditure, superannuation payments and Goods and Services Tax, so have that information handy.
If you find yourself relying on physical paperwork or reports from countless sheets on Excel, consider implementing point-of-sale technology to help streamline the reporting process.
Analysing your finances and cash flow on a regular basis is an important habit, not just during tax season but throughout the entire year.
The momentum from a successful EOFY can’t be underestimated, so if you can maintain good habits you’ll find when the next year rolls around, your tax responsibilities could feel far less taxing.
Maximise industry-specific tech
In the wake of the coronavirus pandemic and uncertainty over what’s to come, it’s important to utilise any competitive advantage you can to empower your business.
With a multitude of tech tools at our fingertips, you can access smart, cloud-based tech to provide the behind-the-scenes help you need to streamline your operations, cut down monotonous processes and focus on doing what you do best.
Cloud-based tech, powered by the internet, allows you to integrate everything from sales reports to customer details online, across multiple platforms, making it easy for you to oversee all aspects of your business, wherever you might be.
Through a point-of-sale system such as Vend, for instance, you can easily connect your POS to accounting solutions like Xero, Quickbooks and MYOB. When it comes to next year’s EOFY, you’ll thank yourself for it.
Very few retailers look forward to tax season, but it needn’t be as daunting as it once was.
By dedicating some time to getting on top of your finances, staying organised with useful tech tools and understanding the new tax initiatives and deductions you can rely on, you can be ready to embrace the new financial year, comfortable in the knowledge that you’re moving forward with the most challenging months behind you.
Dave Scheine is the Managing Director, APAC for retail software provider, Vend.