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It’s that time of the year again – where individuals and businesses have to get ready for tax time. If you own a small business, you may be scrambling around, trying to gather all your records and furiously googling what deductions can be claimed as the dreaded tax deadline approaches. Fret not, for we have you covered. In this article, we look at five great tax tips tips every small business owner should know about before preparing their tax return. Read on to find out more!
1. Keep Strong Records
The first, and arguably the most important tip for making your life easier when it comes to lodging your taxes is that you keep records of your financials throughout the year. We cannot stress how important this is. A well-presented and detailed set of your small business records will quickly resolve any issues that the ATO may have and is a great way to keep on top of things all year round. Thankfully, with the introduction of STP, a good portion of this is already done for you if you use single touch payroll software. This gives you more time to get all your other records in order, and ready for submission to the ATO. Whilst keeping strong records seems more like advice than a tip, we strongly urge you to heed this advice – it will make your entire taxation experience that much simpler!
2. Include All Of Your Income
Tip 2 is to include all of your income. It is highly important that you declare all of your online sales and cash sales in your tax return. The money you may have earned from participating in the sharing economy is also considered income, so don’t forget to add it into your declaration. Other sources of income such as money earned from renting out office space, car spaces and any other odd jobs must also be included in your tax return.
3. Take Advantage of Instant Asset Write Off
Small business owners are in luck because you can take advantage of the instant asset write off. As of this year, any assets purchased after April 2019 entitle you to claim up to $30,000 for your business as an instant asset write off. For example, if you purchase an asset such as a coffee machine for the office, you will be able to claim a deduction of the business portion of that asset up to $30,000. Whilst this write off was once only available to businesses with an aggregated turnover of less than $10 million, the threshold has now been increased to $50 million from April 2019. This write off is an absolute win for small business owners, so don’t forget to take advantage of it!
4. Don’t Miss Out On Deductions
As a small business, every dollar counts. This is why you should make a note of all the deductions you are entitled to at the end of the financial year. You are able to claim deductions for most costs that are incurred from running your business, such as operating expenses, wages, office stationery, electricals and so on. If you happen to be running your small business from home, you can also claim tax deductions from maintaining and using your home for business purposes. Do keep note that you will not be able to claim for private or domestic expenses, should you run a home business. As always, it is important that you keep an accurate record of all these expenses in order to make the claiming process as smooth as possible.
5. Lodge On Time
Last but not least, it is of utmost importance that you lodge your taxes on time. If you are preparing your own lodge as a small business, you will have to meet the 31 October deadline. If you are using a registered tax agent, they may have different lodgement deadlines. You can also utilise MyTax which is now no longer just for individuals. MyTax is a quick, safe and easy way for small businesses to lodge their own tax returns online. You simply have to use your myGov account to access the platform, which gives small business owners a myriad of tools to assist with their tax return.
We hope that this article has given you some insight into the key factors any small business should take into consideration whilst preparing taxes for the ATO. With some organisation and know-how, tax time will no longer be something for you to stress over, but a great opportunity to maximse benefits for your business!
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