Can you believe it’s that time of year already? Tax time is right around the corner and all over Australia, businesses are gathering their paperwork to commence the often dreaded task of number crunching.
The good news? As a small business owner, tax time can be a lot less daunting than its reputation. Check out our top 5 tax time tips for small businesses and start the new financial year in a positive and productive manner.
1. Keep up to date with tax changes
Despite sounding more like an obvious statement rather than a tax time tip, it’s important that you are staying up to date with any changes to small business tax legislation. Don’t assume that one process will stay consistent year by year – economic changes can often make for changes in tax claims. Find out the latest in the 2018-2019 budget and what it may mean for your small business operations prior to tax time here.
2. Spend time going through your deductions
As a small business owner, you have the opportunity to claim deductions on most costs you incur (in regards to business operations). Spend time familiarising yourself with what you can and cannot claim – for example, if you’re working from home with an area exclusively set aside for conducting business, you are entitled to claim deductions for the costs of owning, maintaining and using your home for business activities. Concurrently, a portion of household running costs such as phone bills, cleaning, heating and cooling may also be tax deductible. It’s important to note private and domestic expenses in this respect are not deductible.
Keep yourself backed with accurate and complete records of all business deductions you are claiming.
3. Make sure you’re paying the correct tax rate for your company
If you’re not confused enough about tax as a small business owner already, you’re in for a treat. Companies with an aggregated turnover of less than $25 million a year will pay tax at 27.5% in the 2017-2018 period. However, some companies under the $25 million annual income bracket will continue to pay tax at 30%, depending on the means in which their income is generated.
To understand which tax bracket you’re in and if you’re eligible for the lower tax rate, it’s best to speak with your chosen tax agent. And on the subject…
4. Source a reliable, long-term tax agent
When it comes to tax time, your numbers are best left in the hands of the professionals. Source a reliable, long-term tax agent to take care of your books and let them take you through the process of claiming, making sure your superannuation and bonus payments are all in check and informing you on any processes you need to undertake prior to lodging your statement.
5. Automate your payment collections
The new financial year is a perfect time to automate your payment collections. Make it a fresh start and minimise the time spent on administration tasks by setting up regular direct debit payments and avoid chasing customers for payments. Our sister company, Ezidebit takes the hassle out of your payment collections with customisable direct debit payments, allowing your customers to choose which date to set up regular recurring payments, sending out invoices automatically upon purchase.