Smart Tax Tips for Business Owners
Smart Tax Tips for Business Owners
Proper tax management is critical to keep the business from being audited by the Australian Taxation Office (ATO). Miscalculation of tax can cause your business to lose money and encounter penalties for inaccurate tax deductions. Whenever the year ends, all industries for businesses are required to lodge their tax returns according to the standards set by the law.
For small businesses, lodging of your tax return can be complicated at first. But once you get a hand of it, the process is easy especially when you know the right thing to do. Here are some useful tips for start-ups to simplify tax-related issues.
Tax Management Ideas to Help Businesses Gain Financial Stability
- Take note of your tax deductions. Understanding your tax deductions is important. You should pay taxes according to your business structure and function. This makes it very important that you know well your type of business entity. Prior to establishing your business, decide the best type of business structure that will work for you. It is difficult to change business structure once you have registered it. There are different terms of tax payment for each business type: sole proprietorship, partnership, company, or trust. Make sure to do an extensive research before making this critical decision for your business.
- Always have good tax records. Keeping good tax records throughout the year can help you file your taxes on time without headache of scouting on your books and records. Use a reliable record-keeping tool to document all your business income and expenses properly. You should work on tax preparation months before the year ends. Organise your records and file them for tax purposes. Keep all receipts, bank deposit slips, cash register receipts, and other tax documents.
- Know the taxes you need to pay. There are different types of taxes that you need to pay. Depending on your business entity, you should identify which taxes you are required to pay and how you are going to pay for it. Understand different types of taxes like income tax, pay-as-you-go withholding (PAYGW) tax, self-employment tax, GST and others. Knowing and understanding the types of taxes you will need to pay is very important.
- Separate business and personal expenses. Always make a separate documentation for your personal and business expenses. Keep a separate account for these two types of expenses to avoid confusion and mixing your personal cash to business income. Never use the money from your business to pay for your personal stuff. It can cause problems in paying your taxes.
- Choose the right accounting method. There are two common types of accounting method you can use for your business: cash and accrual. Deciding which will work best for your business helps you to report your expenses and income effectively. To understand better the difference between cash and accrual accounting method, you will need an expert’s advice to help you learn and understand the best accounting method ideal for the industry you are in.
- Ask for expert advice. Do not hesitate to ask for an expert’s opinion when it comes to paying your taxes. You can look for a professional bookkeeping and accounting business consulting service to provide you with learning tools and effective solution to manage your taxes. Companies like The Money Edge are reliable in offering expert assistance through business consulting and bookkeeping services.