Tax season is a very stressful time for a majority of business owners, especially those in the small-to-medium sector. Because they don’t always have a dedicated finance department or outsourced accountant or bookkeeper, they are often ill-prepared to take on the challenge of filing taxes and satisfying compliance requirements in house.
Worrying about missing receipts and trying to determine if expenses are actually deductible, generally trying to figure out how tax law is supposed to apply to your company is never a good look. Your business doesn’t have to be that way, though — not with a little help from finance professionals, at least, and the drive to follow these top tax-saving tips to ensure your small business can file its tax returns effectively.
Use Cloud accounting and digital file-sharing tools to keep data on your business’ finances organised
Various technologies were developed to make life easier, and this includes your taxes! You can keep your business’ financial transactions up-to-date and organised throughout the year without much hassle with Cloud accounting and digital file sharing.
Cloud accounting
Store your financial records in a single place in the Cloud to make it easier to track and calculate your business expenses, income and revenue, to organise and pull up transaction receipts and the like. Additionally, you’ll be able to share it with relevant personnel so they can help make sure your business keeps up with requirements and obligations.
Digital file-sharing
Digital file-sharing — Dropbox, Box, Sharepoint files and segmented account files — is an excellent way for a business to streamline its financial reports. It’s also very convenient for sharing files and records to your accountant who can then handle matters so you stay on top of your tax obligations.
Take advantage of asset write-offs in the same financial year you purchased it
Small businesses are eligible for increased instant tax write-offs as per government guidelines, on capital assets that are ready for business use. If you take advantage of this within the tax period, you may receive a significant reduction in your tax as well as access to the much-needed assets. This rule extends to company assets you procured second-hand, so long as it’s under the threshold of $150,000.
Keep track of which tax deductions and income tax offsets your company is eligible for
Speaking of tax deductions and write-offs, small businesses are eligible for several other exemptions. They act as incentives for small businesses to innovate, increase productivity and, most critical, avoid high-income tax.
- Advertising and sponsorships to promote products
- Business travel-related expenses, including vehicle purchases
- Depreciating assets, including machinery, cars, buildings and more
- Employee salary payment, superannuation contributions and fringe benefits
- Expenses related to the repair, replacement or maintenance of machinery parts and equipment
- Hiring financial services for tax management purposes
- Thefts and insurances (assets, worker’s compensation etc.)
- Work from home claims when operating from a home business
Keep your small business finances separate from your personal finances
Maintaining the clear line between one’s personal finances and one’s business has always been one of the simplest rules a business owner could follow regarding money. The issue is a particular concern during tax season.
If a Shareholder or Director borrows money from the company and doesn’t repay it before the end of the tax year, then the amount may be treated as income and the borrower could be obligated to pay income taxes at their marginal rate, potentially resulting in higher taxation than that of the company
You’ll need the watchful eyes of an accountant to make sure that you don’t miss these sort of things come tax season.
Turn to financial industry experts and professionals for service and advice
Bypass the headache that is tax season by turning to Your Finance Department. We are an outsourced accounting team serving clients in Sydney, Brisbane and Sunshine Coast. With our team on the job, you can rest assured that your books are organised, up-to-date and ready for accounting.
Let us give you a boost on your tax returns savings and fulfilling compliance obligations.
Get in touch today.
