As a small business owner in the behind-the-scenes film and TV industry, you’re no stranger to incurring regular expenses for your work. Whether it’s restocking SD cards or battery packs, you’re used to budgeting for these consumable items and processing them as regular expenses.
But what happens when you have to fork out for a significantly larger expense, like a remote camera controller or new studio monitors?
Investing in a costly piece of equipment for your business can be done in a way that provides giant tax savings, but it has to be done in a savvy way.
Plan before purchasing the equipment.
If you intend to drop significant cash on an item for your business, take time to forecast your cash flow before clicking “buy”.
- Do you have sufficient cash to pay for it upfront?
- How will this purchase impact your cash flow in 3 months/6 months/a year?
- Is leasing the equipment more financially viable?
If you think your cash flow will take too much of a hit, consider financing options. Many retailers also offer payment options to spread the cost over several months.
The timing of buying equipment can have tax benefits.
A bit of nifty planning before making big purchases can make all the difference when it comes to claiming tax relief.
If you buy a new camera in the first month of the tax year, it’ll be almost an entire year before it’s time to file your taxes. In other words, you won’t receive its tax benefit until long after you’ve bought the equipment.
On the other hand, if you purchase the camera just before year-end, it won’t be long until you file taxes and receive the benefits more swiftly.
Always keep in mind when the year-end is so you feel the maximum benefit from tax deduction, and remember to reflect this in your cash flow forecasting.
Changing tax rules can impact your tax savings.
Regardless of whether you purchase equipment before or after year-end, be sure to first look at the latest tax rules. Depending on what kind of item you’re buying, there could be different tax advantages due to changing regulations.
In fact, it may actually be more beneficial to delay the purchase until the new tax year if you know you could benefit from a tax rule that’s being introduced, i.e. a specific rebate.
Alternatively, it might be better to buy the item sooner rather than later if you know you’ll benefit from a tax rule that’s going to be discontinued soon.
It’s best to seek expert guidance on which lesser-known rules you could benefit from.
Tax rules are complex, to say the least. There’s a lot to get your head around, and after rushing between studios and shoots you simply don’t have time to read up on tax regulations.
Don’t worry, we’ve got it covered for you.
At Tailored, we specialise in working with businesses of all sizes in the film and TV industry, from freelancers to studios. We apply our thorough knowledge of tax regulation to spot where you could be saving the most money, while you focus on doing what you do best.
Let’s explore which simple tweaks could secure significant boosts to your cash flow. The first step is to book a friendly, informal chat so we can find out about your business.