10 ways to cut your small business's tax bill

With the end of the financial year fast approaching, small businesses can take steps to save on tax. Here are some last-minute tips to trim your 2022-23 bill.

1. Review all your expenses

The starting point for ensuring you’re reducing the tax liability for your small business is to review expenses and ensure you have all the paperwork to claim relevant deductions.

This can include everything from office supplies and travel expenses to advertising and professional fees.

2. Take a closer look at inventory

This is the ideal time to review trading stock for obsolete lines that simply aren’t selling.

Consider if stock that’s gathering dust should be written down or written off completely.

You’re normally entitled to a tax break for obsolete inventory, as the closing value of stock on hand forms part of your venture’s assessable income.

3. Write off bad debts

This may hurt a bit, but if your business uses an accruals-based accounting system, you may be able to claim a deduction for any bad debts it has incurred.

You can only claim a bad debt deduction for amounts that have been included in the assessable income of the business, either in this year’s tax return or in an earlier return.

4. Take advantage of temporary full expensing

This allows businesses an instant write-off (deduction) for the cost of an eligible asset rather than having to depreciate the item over its useful life.

As temporary full expensing is scheduled to end on June 30 this year, it’s worth making use of this tax saving while it lasts.

The catch is that the asset, such as plant and equipment or a new fleet car, must be in place and ready to use by June 30, 2023 to qualify for an instant write-off.

5. Prepay expenses

Small businesses can prepay certain expenses before June 30 to claim them as a deduction in the current financial year.

This can include expenses such as rent, insurance premiums, professional memberships and subscriptions.

Check the rules around prepayments to be sure you meet tax office guidelines. Your accountant can help here.

6. Make super contributions

Small business owners often make superannuation contributions for their staff but neglect their own retirement savings: in fact, a 2018 study by the Association of Superannuation Funds of Australia found one in five self-employed people have no super at all. That makes it worth making a contribution to your fund.

For 2022-23, the before-tax contribution cap is $27,500, but you may be able to claim unused contributions extending back to 2018-19.

7. Defer income if possible

If the current financial year has seen your business earn higher than normal revenue, it may