Careful consideration and strategic planning can see your new franchise working more for you at tax time, according to an equipment finance company dedicated to the franchise industry.

When starting a new franchise it is important to look to the future, rather than solely focussing on getting your business off the ground. An important time in the life of your business each year will be at the end of the financial year and careful planning must be done at the start of your business to
ensure you maximise your returns at tax time.

Different considerations for new businesses

Cashflow It National Sales Manager Dan Toms says there are different things to consider for a new business as opposed to an existing one. “Franchisees should research which component of their repayments are tax deductable, whether the assets sit on their balance sheet and whether they are looking for long term tax benefits or short term tax benefits,” Dan says.

“Some products are geared towards getting more tax back earlier in the contract and other products can deliver consistent tax deductions over the entire term of the contract.” Dan took tax benefits into account when setting up Cashflow It, which offers equipment finance options to franchisees throughout Australia.Through Cashflow It, franchisees can lease their equipment or shop fittings, exchanging them if they are not suitable or opting to own them at the end of the contract.

“With Cashflow It’s rental and operating lease products the repayments are considered a business expense and are therefore 100 per cent tax deductible,”Dan says. “This may differ from other loans or lease products where only the interest component of the repayments can be claimed as a tax deduction.

“Cashflow It also offers a Finance Lease and a Chattel Mortgage. With a finance lease the client may claim the entire GST portion of the loan on their next business activity statement and with a chattel mortgage the client may be able to fully depreciate the asset in the first year if they meet the criteria for the government’s instant asset write off of up to $20,000.00.”

To find out more about how Cashflow It can help your new franchise and increase your tax benefits, visit www.cashflowit.com.au.