Tax return tips for small business owners
Running a small business isn’t always smooth sailing, especially at the end of the financial year. With these few tax return tips, you’ll have your tax return done quick, so you can get back to business.
Avoid the rush in July by getting your documents together early. For some businesses, this involves manually collecting an inventory of receipts, expense records, invoices or employee details to review your company’s spend. Keeping records helps you understand your business’ financial situation and for tax purposes, receipts should be kept for up to five years. Starting as early as possible is the best way to minimise stress towards the end of the financial year and will help you lodge correct statements. As you go, confirm your business records are up to date and in line with current legislation.
Get ahead of the game and plan ahead by keeping copies of previous years records.
Being a small business there are plenty of things you’re able to claim tax on. Here’s a brief overview below.
Reconciling your accounts ensures bank statements are consistent with your own records, helping you spot any discrepancies in spend and find duplicate transactions. Start by chasing up outstanding payments, pending invoices or unpaid refunds. When all payments are up to date, match your receipts to your bank transactions, asking for copies of receipts where necessary. When you reconcile your accounts, you will also need to consider investment accounts, unpaid or outstanding debts and any leases.
Send payment summaries to employees well before July to ensure your business’ accounts are reconciled before PAYG summaries are provided for employees. Use this chance to update employees’ current financial details and superannuation payments, also checking any termination dates and leave entitlements.
A meeting with a bookkeeper or accountant can be useful as the new financial year approaches.
Some business owners use this opportunity to pre-purchase service and supplies to claim a deduction but fall for the trap of spending for unnecessary items, simply for a tax deduction. You can make a tax deduction on any important businesses purchases.
Keep accurate and detailed records to help you make the right deductions and concessions for your business. While it may take you some time to delve into the details of what deductions are available, a little effort from the experts will help your business pocket extra savings this financial year.
You can claim expenses related to the running of your business -mostly for day-to-day costs or for expenses that depreciate over time but are used to improve the structure of your business. To see what can and can’t be claimed, Check the ATO website.
Registered businesses with an ABN and a turnover under $2 mil may take advantage of recent tax concessions. This means they can claim any assets (less than $20,000) if an ongoing activity is adequately demonstrated. According to the ATO, your business may be eligible to claim up to $300 on home office equipment, electrical costs, cleaning expenses or repairs although documentation is required to claim deductions that exceed $300.
The end of the financial year is also an opportunity to compare your business’ performance to last financial year. You can then set realistic business goals for the upcoming year.
Lauren suggests that businesses should consider investing time and money in the right accounting software. This will minimise the risk of tax audits and penalties.
“Be organised. If you have adequate accounting software and bookkeeping procedures, you can do the work as you go,” she says.
The pressure of running a small business is already a lot to handle. When the end of financial year comes around, why not leave it to the experts? From tax accountants to bookkeepers, request a free service and make the right expert connection.
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