Tax tips for small businesses

Tax time can be a stressful time for small business owners, but they could do a number of things to get ready.

Mathew Umina, Assistant Commissioner at the Australian Taxation Office (ATO), said, “Small businesses in Australia contribute more than $380 billion to the economy each year and are an essential driver of economic growth. That is why the ATO is committed to supporting small businesses and making it as easy as possible for them to understand and meet their tax obligations at tax time”.

Umina has some tips to help small business in the lead-up to and during tax time:

Get your records ready

A way to have a stress-free tax time is to keep up-to-date records. Keeping good records will help small businesses to complete and lodge their tax returns, manage cash flow, meet their tax obligations and understand how their business is doing.

“Small businesses need to keep records explaining all transactions that relate to their tax affairs containing enough information to calculate the income, expense and other amounts that must be reported in tax returns,” said Umina.

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

Consider small business concessions

A range of tax concessions could help at tax time. For example, simplified trading stock rules mean if the estimate of the difference between opening and closing trading stock is $5000 or less, the small business doesn’t need to do a stocktake.

“There are also concessions that allow new small businesses to claim an immediate deduction for start-up costs like professional, legal and accounting advice,” Umina said.

Small businesses that use simplified depreciation rules can take advantage of the $20,000 instant asset write-off. Remember, to be able to write off the business portion in a 2018 tax return the small business has to buy and install assets that cost less than $20,000 by 30 June 2018.

To see what small businesses can access according to their turnover, visit ato.gov.au/concessionsataglance.

Check deductions

Most expenses incurred in running a business can be claimed as a deduction. This includes operating expenses, business travel expenses, home-based business costs and costs of employing people.

“When working out what business deductions to claim this tax time, it’s important to remember the three golden rules. One — the money must have been spent 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,” said Umina.

To find out more about what can be claimed, visit ato.gov.au/businessdeductions.

Find out if changes apply to you

There are a few changes that apply from 1 July, for example, employers with 20 or more employees are required to start reporting through Single Touch Payroll, unless they or their payroll software provider have been granted a deferral or they have been granted an exemption by the ATO.

Also, if a small business is registered for GST and imports low-value goods for business use in Australia, they may not need to pay GST. They simply need to tell their supplier that they are registered for GST, and provide them with their ABN.  For more information, visit the ATO’s Information for business purchasers page.

Support

Most small businesses use a registered tax agent for tax advice and to lodge their tax return. ATO offers a range of learning resources to make it easier to get small business tax right, including small business webinars and workshops. There are a number of services where small business operators can chat to ATO one on one, such as Live chat, After-hours call back service and Business Assistance Program offering tailored support over 12 months.

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