4 tips to close your financial year on a high
Financial planning is important throughout the year, but there is always a greater need for financial discipline at the end of the financial year. With March 31st getting closer, it is best to keep your financial advisor close and explore your opportunities for the New Year. Most of your financial duties remain the same from year to year. However, sometimes there are different obligations that show up. Tax planning, for example, is one aspect many people tend to ignore, but now that the financial year is almost ending, it’s wise to stay prepared or you will end up paying a large amount.
So whether you are a small business owner or managing a larger organisation, here are five tips that will help you close your financial year neatly.
- Contribute to your super income plan
The last quarter of the year is the best time to review if you have contributed enough to your super income. There is a good chance that you could improve your super income and reduce the amount of tax that you are liable to pay. This can only happen if you haven’t already reached your contributions caps for the financial year. Contribution caps limit your ability to contribute to your super income each year on a concessional tax basis.
- Sacrifice a part of your salary
A fast and effective way to build up your super income is by investing a part of your regular income straight into your super account. This money will help you in the long run and even when you stop working will ensure financial stability. You could also end up paying less tax as your sacrificed amount is taxed at a smaller rate than your standard marginal tax rate. You can talk to your employee about a salary sacrificing agreement. Keep in mind that you can only sacrifice future incomes so plan and apply for this before the new financial year.
- Be charitable
You can always contribute to charity and the best time to do this is before the financial year ends. You will get a deduction from tax and someone in need will benefit from your help. If you are a business owner, you can encourage your clients to give end-of-year donations as well. Encourage them to make donations to charity with shares of appreciated stocks, ETFs, or mutual funds. Here, your clients will be acknowledged for the market value of the investments and they will not have to pay any capital gain tax on their investment profits. Several charitable organisation accept this sort of donation, but it is always better to check with them before making a donation
- Clear your bad debts
The end of the financial year is the perfect time to write off the bad debts that you have accumulated over the year, whether you’re a small business owner or an entrepreneur. However, in order to minimise your tax bill, make sure that you document the debts and the efforts you made to recover them. They must be physically written off before March and not when you get down to doing your tax returns.
With the financial year slowly coming to a close, ensure that you clean up any messes and sort out your situation. Pay attention to tax reforms and consult a financial expert if you must. Most importantly plan ahead and be prepared for any situation in the coming year.