Tax time tips for small business!

Small business claims

Need some tax time tips for small business? The Australian Taxation Office (ATO) is lending a helping hand to nearly four million small businesses to get their tax right this tax time.

Assistant Commissioner Peter Holt said the ATO understands that small businesses have a lot on their plate with the day-to-day running of their business. “That’s why we’re focusing on addressing common issues we see when small businesses lodge their returns so that we can support them to get it right,” he said.

ATO focus areas

The top 3 issues that we see when small businesses lodge their tax returns are:

  1. Failing to report all of their income
  2. Not having the necessary records to prove small business expenses claims.
  3. Claiming private expenses as business expenses

“For example, you’re a sole trader landscape gardener who usually works in Perth but took on a job in Broome. While you’re up in Broome, you do some sightseeing. That’s a private expense and you can’t claim the cost of that in your tax return,” Mr Holt said.

He said there are three golden rules to remember about claiming deductions.

“One, the expense must have been for your business not yourself. Two if you use something for business and private purposes, you can only claim the portion that is related to your business, and three, you need a record to prove it.”

Tax Time Tips – New factsheets to address common claims

This year the ATO has developed fact sheets to help small businesses claiming three of the most common expenses:

Mr Holt encouraged small businesses and tax practitioners with small business clients to use the fact sheets to find out more about what can be claimed. “They have practical examples of how these rules apply to everyday small businesses – from home-based photography studios to someone who needs to travel quite a bit for their business. Our priority is to make it as easy as possible for small businesses to get it right,” he said.

Keep accurate records

The top tip for small business operators is to ensure that your records are kept up-to-date. Good record keeping will help you complete and lodge your tax returns, manage cash flow, meet your tax obligations and understand how your business is doing.

Mr Holt said when we see businesses operating well, we see that they get the basics right. “They keep good records, they run their business with the help of technology (such as point of sale software and accounting systems), and they seek advice from a tax professional when they need it.”

“Our tools also help small businesses keep accurate records. For example, sole traders can use the myDeductions tool in the ATO app to keep records of their income and expenses. Then, at tax time, they can send a copy to their registered tax agent or upload their data into their tax return.” Mr Holt said.

“In addition to making it easier to meet tax, super and salary obligations, good records mean that businesses can measure their performance against the ATO’s small business benchmarks,” Mr Holt said.

Benchmark data for more than 100 industries is available by using the business performance check tool in the ATO app.

For more information on what records are needed for tax returns visit ato.gov.au/taxreturnrecords or use our record keeping evaluation tool to evaluate how well a small business is keeping business records.

The instant asset write-off has been increased and extended.

Small businesses are also entitled to a range of tax concessions at tax time. One of these is the instant asset write-off, which allows eligible small businesses to claim an immediate deduction for the business portion of assets that cost under a certain threshold. More information about the instant asset write-off and other small business concessions is available at ato.gov.au/concessionsataglance

Know where to get help and support

If you need help or are not sure what to do when it comes to your claims, contact JSM Accounting! Our team of accountants are here to assist you in getting the very best result and ensure that you stay firmly within the tax rules when it comes to small business income tax.

Give us a call on  07 3814 6512

Book an Appointment via our real time booking system here
Or visit us at our office located at Town Square, Redbank Plains.

Read the original article published on the ATO website here.

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