With the end of the financial year fast approaching, there’s no better time to take stock of your business’ growth, tie up any loose ends and revisit your broader commercial strategy. With that in mind, this article sets out three new financial year’s resolutions that will set your business up for success.

1. Get on Top of Your Tax Return

Firstly, complete your tax return. While it can be tedious, you’re best to get it done well and get it done early (especially if you’re expecting a refund).

The Australian Taxation Office (ATO) has noted that the most common mistakes for small businesses include a failure to:

  • record cash income and expenditure;
  • account for personal drawings;
  • record goods for your own use;
  • separate private expenses from business expenses; and
  • keep adequate stock records.

Seeking the advice of an experienced accountant or tax lawyer will ensure you’re claiming deductions where appropriate while upholding your record keeping obligations.

Tax time is also the perfect opportunity to reassess your business’ tax needs more broadly. In particular, the way you have structured your business will have tax implications. For example, the following table sets out the tax differences for a sole trader versus company structure.

Sole Trader Company
Tax Rates Sole traders pay tax at the individual income rate. The tax free threshold applies. The company tax rate is currently 30% (or 27.5% for certain smaller businesses). There is no tax free threshold for companies.
Small Business Concessions There are a number of small business tax concessions available, including:

  • a discount on capital gains tax (CGT);
  • income tax concessions;
  • GST concessions;
  • pay as you go (PAYG) instalment concession; and
  • fringe benefits tax concessions.
There is no CGT discount. However, companies have access to:

  • income tax concessions;
  • GST concessions;
  • pay as you go (PAYG) instalment concession; and
  • fringe benefits tax concessions.
Type of Tax Return Sole traders simply lodge their individual tax returns. Business income and expenses are noted on a separate business schedule. You must lodge a separate company tax return, as well as your personal tax return.

2. Reassess Your Branding and Intellectual Property Strategy

The new financial year is also a prime opportunity to ensure your intellectual property (IP) is well-organised and your brand well protected. Your IP suite commonly includes all copyright, trade mark, design and patent rights.

Register Your Rights

Registering a trade mark for your business name or logo if you haven’t done so already is an especially critical step in protecting your brand against competitors. It gives you the exclusive right to use your marks for your goods and services, in your industry.

If you’re looking to expand your business next financial year, it’s even more important to ensure you have registered rights in the locations you have, or plan to have, a presence.

Similarly, if you have an invention or design that’s new and innovative, explore whether you could achieve patent or design protection. These registrations give you protection for enough time to develop and sell your product and exploit market share.

Get Your Registrations in Order

You should also confirm that your IP belongs to your entity. For example, your registered trade marks should be in your business’ name (rather than your personal name) and any copyright that contractors or employees create should be assigned to your business.

If the ownership of your IP is uncertain or scattered, you risk facing disputes down the track.

Commercialise Your Valuable Assets

Finally, you should consider whether licensing or assigning your IP makes sense for your business.

By licensing your IP, you maintain ownership, but can make money by allowing other parties to use it for a set period of time. If you’re no longer using an asset, you may wish to assign it. This means you sell it and cannot get ownership back.

A robust and commercially savvy brand protection strategy ensures that your IP remains one of your most valuable commercial assets. Make sure you renew your protection before it lapses and you can be confident that your IP will continue to be recognised in your market and grow in value.

3. Review Your Employment Agreements and Policies

From 1 July 2018, the Fair Work Commission is increasing the minimum wage by 3.5%. Accordingly, it’s best to review what you pay your employees.

In addition, you should revisit your employment agreements to ensure they contain key terms. The new financial year often means bringing on new staff and you need to be sure the agreement new team members sign is one that protects your business. Similarly, you may like to make changes to your employment policies, such as your social media policy or bullying and harassment policy.

Having such policies in place, and updating them regularly, means that your employees are clear on what’s expected of them and you have a clear process to follow in the case of any breach or complaint.

Key Takeaways

Tax time is a great opportunity to reflect on your commercial progress and set yourself up for continued success. To do so, you should set (and follow through with) three new financial year’s resolutions:

  1. complete your tax return and reviewing your business structure;
  2. update your brand protection and IP strategy; and
  3. prepare for the increase in the minimum wage and revisit your employment agreements and policies.

These three steps will ensure you start the new financial year on the right foot and give yourself the best chance at continued growth. If you need assistance this tax time, get in touch with LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page.

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