Similar to many small business owners in Sydney, you started your business to earn a living, and not because you have experience in taxes or accounting. One error could get you audited by the Australian Taxation Office (ATO), and even if you don’t get audited, you could be paying more in taxes than you are supposed to.
Small business owners must be well-prepared before tax season. Below, we have compiled important tips to help you manage your business taxes.
Hire a Good Accountant
Many Australian business owners find and hire good accountants to ensure the correct filing and payment of taxes. This will lower the amount of time the employer expenses on taxes and accounting. As a result, you can focus on improving your business and leave the tax filing to a professional. Consult with tax return accountants in Sydney to remain stress-free even before the filing deadline. There are several accountants in the market, so ensure you prioritize those that have worked with businesses of your size and structure. Look to other local business owners to get recommendations.
Analyze Business Tax Credits
One of the best ways to reduce your business tax bill is through tax credits. Tax credits provide dollar-for-dollar deductions in your tax liability. Let’s assume you have a tax bill of $7,000, and your tax credit is $3,000. You’ll have a final tax liability of $4,000 ($7,000 preliminary tax liability – $3,000 tax credit). When you give your employees retirement plans or subsidized health insurance, you qualify for tax credits.
Your Business Structure Matters
How your business is registered affects how your taxes are paid. These are the most popular business structures; sole proprietorship, limited liability company (LLC), S corporation, and C corporation. All these business structures have their separate tax implications. Be sure to examine all the business structures before registering your business.
Determine Your Tax Liability
One of the first discussions you have with accountants in Sydney will be to determine your tax liability, which will impact how taxes are filed and paid. Every tax liability is special and is informed essentially by four elements; business structure, location, assets, and the number of employees. The kind and quantity of assets may also affect a business’s general tax liability.
Make Bookkeeping More Efficient
Effective and easier bookkeeping is the perfect way for small business owners to reduce the stress of tax season. With the wide variety of accounting software present, there is no need to use stressful manual methods that invite errors. Besides having accounting software, many businesses seek other solutions in business banking that integrate with QuickBooks to avoid any manual exports and uploads in their accounting software and get a real-time view of their cash. This allows businesses to have easier management because of the immediate access to their revenue, and save time because of all the manual transactions that are done automatically through these tools. With your financial records correct and all in one place, it will be easier to maximize your return, while averting penalties that come with incorrect tax returns.
Separate Personal and Business Finances
The first move to make before starting a small business is opening a new bank account. One of the fastest and simplest ways to have tax problems is by recording personal expenses as business expenses. Having a different bank account for your small business makes tax time much easier.
Tax time is always going to be a stressful period for small business owners who file and pay taxes themselves. These tips will certainly prepare you for the upcoming tax season. Whether you are hiring an accountant, simplifying your bookkeeping, or determining your tax liability, the perfect time to begin planning is now.
