The end of financial year presents a great opportunity for businesses to do some spending—and generate more tax savings. We’ve made a list of practical spending strategies you can capitalise on.
This article is published by Modoras Accounting (QLD) Pty Ltd V11022019
End Of Financial Year Spending Strategies For Small Business
The end of financial year may alleviate inhibitions by business owners looking to purchase equipment and other assets vital to generating revenue and, instead, encourage business spending because of opportunities for additional tax savings. Such concern may stem from fear of overspending—poor cash flow has been determined as one of the several reasons why businesses fail.
Out of the more than 2.1 million small businesses in Australia, 54,900 closed down in 2018, indicating a 12.7% increase from the previous year. Going bust could be attributed to numerous factors, including inadequate cash flow.
The Australian Securities and Investments Commission (ASIC) reported that 49% of businesses struggled with cash flow last year.
While there are measures expected to help small businesses access finance, there are easier, more practical ways to inject some cash into a business.
Why spending during EOFY can help businesses thrive
Spending money for items (i.e. new equipment, hiring new staff) that can generate profits for businesses before 30 June may result in tax savings—an appealing concept for those who’ve been putting off buying that laptop, for example. But while it present promises of pocketing more savings, EOFY spending also comes with risks.
Making an informed decision with the help of a professional adviser. Furthermore, seeking expert advice may reveal to you other attractive options for getting more tax savings.
Instant asset write-off
Designed to help businesses to claim more in their tax returns, the instant asset write-off recently got a significant threshold increase to $30,000 for the business portion of each asset, allowing business owners to instantly claim for any item used for work.
Ways businesses can boost profits during EOFY
Conduct a sale
EOFY presents businesses with the chance to offload stocks. By doing a quick inventory of stock-on-hand and selling them at customer-friendly prices, businesses also give individuals looking for ways to reduce their taxable income the opportunity they need.
Offer a more personalised experience
In 2017, a study found that 78% of customers are dissatisfied with the level of personalisation they are getting from brands, hence affecting their buying decisions. An Epsilon report showed that 80% of consumers will buy from brands that offer personalised experience.
Slashing prices may no longer cut it for most consumers. Customising offers—by considering buying history, personal preferences, and even location—can help bring in more sales.
Providing product demonstrations is one strategy that may benefit your business. Experiential marketing may cost several dollars but with the right approach, businesses can reap the rewards. Bricks and mortar and online businesses that show customers or—even better—let them experience the benefits of products and/or services are more likely to produce a sale.
This ties in with consumers’ cravings for a more personalised experience. Product demonstrations put them ‘in the moment’ by eliciting interest and conveying in them a sense of ownership.
Instant gratification inspire reciprocity
There’s a reason why free samples work and why they should be included in a business’s marketing strategy. Aside from the obvious benefits—more foot traffic, spike in sales and brand awareness—this reduces the perceived risk, making buying a comfortable decision for the customer.
Another reason to spend
The end of financial year offers more opportunities for getting tax savings: all marketing and advertising costs are tax deductible. Boosting marketing efforts now then opens more ways to improve cash flow—through profits and tax savings.
With the EOFY approaching, now’s a great time to implement smart strategies to inspire business growth. And since there is no one-size-fits-all solution, seeking help from professional business advisors will be beneficial.
We have professional advisers who can help you make insightful decisions for your business. If you’re ready to make those purchases, take pause for a moment and talk to us. Book an appointment today by clicking here.
IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual's personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.
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