Tax Saving Tips for Your Small Business

Tax Saving Tips for Your Small Business

As a business owner, tax time is a great opportunity to get your accounts in order and up to date. Having a business, you are always in contact with your tax agent or account throughout the year. 

It’s important that you obtain essential tax advice for your business which will help improve your financial position in the future, it’s important to have sound knowledge of the ins and outs of your business and its daily running’s to. If you are just starting out, made a few errors, or need to correct your business records, click here to investigate how a business valuer can work with you and the type of business valuation you require.  

In this article, we will cover the basics of tax-saving tips. A single mistake can increase your tax bill, so follow a few techniques that you can start working on today and begin to plan and prepare before the end of the financial year.

Types of business taxes 

  • Income taxes – federal/ state taxes 
  • Employment taxes – a tax on your employment income taxes that you are obligated to pay. 
  • Sales taxes – goods and services seller 
  • Excise taxes – fuel, transport 

As any business owner, having the basics ready to go is important, meaning, good record-keeping, evidence, and correct account records. As a small business, you need to have all supporting documentation and records that relate to the business, both profits, and losses. 

This includes:

  • Cash income and expenses 
  • Account personal transactions and the use of company money or assets 
  • Record all the goods for personal use
  • Private and businesses expenses separated 
  • Record all tax invoices with registered GST 
  • Stock records 
  • Motor vehicle claims if used for the business 

Having a tax agent that can take responsibility when preparing your return, as long as you provide all supporting documentation and records that relate to your business as they will require and ask about your cash flow, business performance, personal use of all the assets, and records. By being prepared will result in a smooth stress-free process, that hopefully will have you saving money. 

  • Asset Depreciation 

As a small business owner, you may be eligible to claim an instant asset write-off to the value of $20,000 if your gross annual turnover is under $10 million. By doing this your taxable income will be reduced by the cost of the assets. 

  • Superannuation Contributions

Personal contributions made to your super are taxed at 15%, which may be lower than your income tax rate, which will allow you to claim a deduction on the contributions made. 

  • Business Vehicle recordings

Having a logbook to record each time the vehicle was used for business purposes, such as parking fees, fuels, tolls, and maintenance. This will allow you to accurately claim for vehicle expenses at tax time. 

  • Income and expenses 

By deferring your income, you can cut down your tax bill for the next financial year. By delaying the invoicing, the amount will not be incurred on your taxable income for the previous year. 

  • Expenses not paid by EOFY

If some expenses have not yet been paid by the end of the financial year you can still claim these deductions. These expenses include: 

  • Staff salary 
  • Staff bonuses and commissions 
  • Repairs and maintenance 
  • Bad debts 

If you believe debt has been written off and originally shown as income and you can prove this, you can claim a tax deduction on various bad debts. 

  • Small business tax offset 

As a small business owner that operates as a sole trader, you may be eligible to claim a tax offset on your tax return, which can reduce the amount you would need to pay up to $1000 a year. The ATO will calculate the offset based on the information you have provided when you lodge your return. 

  • Government benefits. 

If you receive any payments from the government, these are taxable. For sole traders, you would need to include these payments on your tax return. If you have a partnership, trust, or company you may report the payments as either: 

  • Income in your company tax return 
  • Business income in your trust or partnership 

These techniques above will help cut down your tax bill and give you a starting point on getting yourself and your business in order. Speak with a professional, especially one specialized in business valuation services for tax purposes to help you save time and money when it comes to completing your tax return. 

Author Bio 

Tyla Wood – LinkedIn Profile 

Tyla Wood is an expert in valuations services for a range of property types. With over 20 years experience completing valuations across residential, commercial, and industrial properties, Tyla has taken part in multiple large-scale valuations for various government agencies. Tyla often speaks at local career seminars for both TAFE and tertiary courses and enjoys engaging with her peers and clients in regard to her local market knowledge within the Perth metropolitan area.

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