Top Tax Tips Small Business Should Consider
During tax time, the Australian Taxation Office (ATO) likes making things easy for all small businesses. Whether you manage your own taxes or rely on a tax agent, some vital tax planning tips can assist you to get it right.
Always include all the income
You need to declare all your cash including online sales on the tax return. The income may include the money you earned from taking part in the sharing economy. For instance, if you rent out a room, a parking space or do odd jobs like cleaning or delivering at a fee, be sure to include all these on the tax return.
Avoid missing out on deductions
Small companies need to claim what is theirs. As an entrepreneur, you can claim tax deductions for expenses you incur as you run your company. Generally, you can claim operating expenses like wages and office stationery. But, you can only claim capital expenses over a long period. These capital expenses include machinery, equipment as well as buildings.
If you operate your business from home, you can also claim some tax deductions for a portion of owning costs, maintenance and using your home for business purposes. In case you use your home facilities to run the business, you can claim a portion of running costs like cooling, heating, cleaning, the decline of furniture value and phone call costs.
Some exceptions you need to know are that you cannot claim deductions for domestic or private expenses. Know that fines, entertainment and other expenses are excluded from business deductions.
Do not forget to keep an accurate and complete record of all the income and business related deductions you claim.
Consider checking a personal service income
Self-employed people who mainly earn through their personal skills, efforts or expertise, may earn a personal service income. The new tool designed for personal service income will assist you to know if your income is a personal service income one and if some special tax rules apply. If these tax rules apply to your service income, they can affect the deduction you are eligible to claim as well as how to report your income.
Lodge on time
If you run a small business and you are getting ready to file the tax return, be sure to do so by 31st of October. If you work with a business tax service, then the professional should advise you accordingly.
