Tax time guide for hospitality businesses

The end of the financial year (EOFY) is fast approaching on June 30th, and it's easy to wonder where the time went. This period can be extremely stressful for business owners and operators. 

To help you navigate this EOFY and alleviate some of the stress, we have put together a comprehensive guide. Here are some key areas to focus on:

1. Planning and reflecting
2. Tax write-offs and deductions
3. Federal Government budget impacts
4. EOFY sales
5. EOFY function/party ideas
6. EOFY promotions
7. Looking out for your staff
8. Seek Help
9. Accounting integrations
10. Stocktake
11. Review partners

1. Planning and reflecting

Take the time to reflect on the financial year that has passed and plan for the future. Review your business's overall performance, set new goals, and track your progress. OrderMate's advanced reporting features provide valuable insights for more accurate forecasting and informed decision-making.

Ask yourself these questions:

• Has the year been profitable compared to the previous year?
• Are you ahead in terms of tax planning? Seek assistance from finance professionals to avoid last-minute rushes.
• How are your staff doing? Have you maintained a positive work culture and provided necessary support?
• What does the future look like? Stay updated on market trends and adapt your business to capitalise on new opportunities.

2. Reduce tax - End of year write-offs and deductions

Understanding your business structure is crucial since each structure has its own tax requirements. Keep track of your business expenses and maintain records for deductions. Here's a list of potential write-offs that your business may be eligible for:

• Wages
• Cash registers/POS systems
• Computers and laptops
• Security systems
• Insurances
• Rent
• Power/gas
• Furniture
• Laundry/cleaning
• Marketing costs
• Website/subscription fees
• Donations
• The depreciating value of any goods you own

Consider investing in necessary equipment that can provide a larger tax deduction, potentially resulting in a lower overall tax rate. For example, upgrading your Point of Sale system to OrderMate POS can be a wise investment, especially since you can claim it in this year's tax return.

3. Federal government budget impacts

Take advantage of government initiatives that can benefit your hospitality business:

Instant Asset Write-off

A big tax break for small hospitality businesses is the instant asset write-off. This eligibility was expanded in 2020 as an effort to push business investments during the pandemic and has been extended until 2023. Small businesses with an aggregated annual turnover of less than $500 million can claim a deduction for assets that cost less than the instant asset write-off threshold.

This is highly attractive to hospitality operators as they can claim this deduction straight away. To find out if you're eligible check out the ATO for more details.

Staff Training:

Small businesses with an aggregated annual turnover of less than $50 million can claim an additional 20% deduction for eligible training courses to upskill staff. The course participants must engage online or in-person in Australia through external education providers who are registered in Australia.

Technology:

Small businesses with an aggregated annual turnover of less than $50 million can claim an additional 20% deduction for business expenses and depreciating assets that support digital workplace items, such as portable payment devices, cyber security systems, and subscriptions to cloud-based services.

4. Make the most of EOFY Sales

Many businesses offer sales leading up to EOFY, providing an excellent opportunity to invest in needed products or services. Stock up on anticipated items that will be used through the coming year at discounted rates to save your business money.

5. EOFY function/party ideas

Hitting the EOFY is a milestone for your business, so celebrate it with your staff who have helped make it all happen. Not only are events like these fun but can also act as a good team-building activity. You want your staff to enjoy their job and workplace, activities like this can help create a better working environment.

Think outside the box and make sure everyone in your team can get involved in these activities. EOFY celebrations could include:

• Activities like mini-golf, bowling, karaoke or an escape room.
• Support other businesses in the hospitality industry by taking your staff out for brekkie, brunch, lunch or dinner.
• Organise a bar tab at another venue to give your hard-working staff a well-deserved break.
  A simple get-together at your venue, ordering in takeaway pizza and playing team-building games.

We all know how hard it is to find and keep staff, so these sorts of celebrations can help lift staff morale. Creating a fun and positive work environment can help increase staff retention levels, whilst also attracting new employees to the business.

6. EOFY promotions

The EOFY is an excellent opportunity for hospitality businesses to attract customers who are looking to celebrate with their teammates. Businesses may have some extra budget left over and are looking to spend it before the EOFY - Make them choose to spend it in your venue.

Here are some promotional ideas to consider:

1. Special EOFY set menu: 
   Implement a special EOFY set menu that includes any excess stock identified during your stocktake. This helps control inventory and ensures items are sold before the end of the financial year.
2. Buy one get one free drink: 
   Offer a buy one get one free drink promotion for the EOFY function. This encourages guests to bring their colleagues and enjoy a complimentary drink on arrival.
3. Happy Hour Pricing:
   Provide happy hour prices for the first hour of the EOFY function. This creates a sense of excitement and value for guests attending the event.
4. No Minimum Spend:
   To encourage function bookings, consider waiving the minimum spend requirement. This makes it easier for groups of people to book your venue for their EOFY celebrations.
5. Early Booking Incentives:
   Offer incentives for customers who book their EOFY function before the end of the financial year. This could include a voucher or a percentage off the final bill, providing an extra incentive for early bookings.

7. Taking Care of your staff

Remember to consider the well-being of your staff during tax time. We all know how hard it has been recently in the hospitality industry to find staff and retain them. With the stress that comes from hospitality work, take a load off your employees around tax time and provide them with useful resources.

Staff can claim various work-related costs at tax time. The ATO website is a great resource to provide them with in order to help understand what they can claim back on tax. Hopefully walking away with some extra cash in their pockets.

Many work-related expenses can be claimed by hospitality staff such as:

• Clothing/laundry costs
• Car expenses
• Self-education such as courses
• Tools and equipment

Creating a happy and safe workplace environment is crucial for staff retention and customer satisfaction. Research shows a strong link between employee well-being and customer satisfaction. Happy workers contribute to better customer service, ultimately benefiting your business.

8. Seek expert advice; talk to your accountant

Knowledge is power, running a business is time-consuming and the hours are rigorous so it's not always possible to take on every task yourself. 

Don't hesitate to seek help from experts, especially your accountant. They can provide valuable advice tailored to your business's specific needs and help you navigate the complexities of tax requirements.

9. Accounting integrations

Accounting software integrations can be a god-sent at tax time, saving you valuable time and money. The setup of these integrations is easy and can take a huge weight off your shoulders.

If you haven't had the time to integrate this financial year, now is as good time as ever to integrate and be prepared for the next financial year. Here are some recommended accounting software options:

Xero

Xero is a world-leading online accounting software designed for small businesses. It offers real-time cash flow tracking and mobile accessibility, reducing manual data entry and saving time.

What's so great about Xero is all you have to do is enter your business details and then you can get started. They provide you with a real-time view of your cash flow and the ability to view this information anywhere through its mobile app.

MYOB

MYOB provides various business management solutions to support you with accounting, payroll, payments, retail point of sale, CRM and professional tax solutions. It allows you to run your business on a more efficient level saving you time by allowing you to import and export the sales and data.

LightYear

LightYear specialises in accounts payable cloud accounting products for businesses. LightYear removes repetitive tasks, saving you time and streamlining processes. Their mission is to help businesses thrive by delivering innovative tools which streamline processes & payments, digitise data, provide insights and connect businesses in the Lightyear Cloud.

10. Stocktake

Performing regular stocktakes is a vital aspect of managing a hospitality business. By closely monitoring your inventory and identifying what is selling well and what isn't, you can make informed decisions about your stock management.

Advantages of stocktake:

• Gain a comprehensive understanding of your stock levels and inventory.
• Avoid overstocking or understocking. 
• Identify items that need to be replenished or reordered.
• Improve cash flow by identifying slow-moving stock and taking steps to reduce it.
• Minimise the risks of spoilage and waste. 
• Detect any instances of stock theft.
• Evaluate and adjust your pricing strategy based on stock performance. 

To effectively manage slow-moving stock without letting it go to waste, consider creating special promotions or offers. For instance, you can feature a wine that has been sitting in your stock room for a while as the included drink in the EOFY package or offer it as a complimentary drink during the EOFY function.

To determine if you need to submit an official stocktake for tax purposes, consult the Australian Government Business website. However, if your business falls under the small business category with less than $10 million of aggregated turnover and estimates that the value of trading stock changed by no more than $5,000 in the year, you may not be required to conduct an official stocktake or account for changes in your trading stock's value.

OrderMate has developed StockMate, an advanced stock control and inventory management app that seamlessly syncs with your POS system. With StockMate, you can simplify and streamline your entire stock management process.

11. Review partnerships

The EOFY is an opportune time for reflection. Are your current business partnerships still delivering value as they used to? It is crucial to review the performance of your partners and conduct research to ensure you are receiving competitive prices and utilising efficient systems. As advancements and innovations constantly emerge, it is essential to verify that your partners are keeping pace with the evolving landscape.

In today's fast-paced world of technological advancements, staying alert and leveraging new opportunities is vital to avoid falling behind.

We wish you all the best for the end of this financial year and the coming financial year! If you need any assistance, please don't hesitate to reach out to us at OrderMate.