Tax Tips For Small Businesses

Tax filing is that time of year when businesses get stressed. Some businesses might be confident about their well-organized books, but a lot might be under stress. For businesses like this, there’s a high possibility of messing up tax returns by forgetting exemptions and refunds.

One of the sectors that fact the most difficulty during tax filing is small businesses and freelancers. These are often unorganised and don’t have employees to look after business tax filing. 

Avail Immediate Asset Write-Offs

Small businesses are eligible for instance asset write-offs for capital assets up to $30,000. A company can gain capital assets and avail deductions against yearly profits at the same time. There are some prerequisites, such as the fact that the asset should be ready to use and must be used only for business purposes. It should be bought in the financial year for which you want to avail deductions. The small business also needs to be operational, with a GST number. 

Keep Your Financial Data Organised

One of the most significant points to file taxes in an efficient way is to keep your financial records up to date and organised throughout the year. There are two ways to do this:

Cloud Accounting

Cloud accounting makes it easier to record as well as calculate financial expenses, incomes, gains, and losses. Cloud accounting lets you easily search for transactions, so you won’t lose receipts. It also helps with staffing, inventory, and invoicing. Your accountants can easily access your financial data as well as work on it, helping you to keep up with all your financial requirements and obligations. 

Digital File Sharing

You can also keep your finances organised through digital file-sharing. This can be done through dropbox files consisting of reports as well as accounts arranged in separate files. You can also share Google Excel files with your accountant and record transactions in it. This lets you make comments against entries too. Another way to keep on top of your tax returns is through the Australian Taxation Office app, where you can easily record your business travel-related logbook activity as well as receipts. 

Be Informed About CGT (Capital Gains Tax) Changes

When a small business sells off its active capital assets like business buildings or a trade, they are allowed up to a 50% tax deduction. In order to be eligible for such deductions, a small business must pass a $6million net asset test. This exemption is deferred if a replacement asset is bought within 2 years of selling the CGT asset. The gain is deferred until the replacement asset is disposed of. The rate of the deduction varies as per several criteria set by authorities. Changes in terms need to be looked into and applied accordingly. 

Income Tax Offset

If the revenue of your small business is less than $5million, it is eligible for around $1000 off your tax bill. This offset rate is currency 8% but might increase to 16% in the later years. This exemption allows more innovation by small businesses and increases productivity. It also saves micro-businesses from high-income tax.