As another financial year draws to a close, it’s time to get your affairs in order for the taxman. Whether or not you have an accountant, this guide will provide tips to maximise your return while minimising your stress levels.
Know your taxes
The three main taxes are:
- GST: 10% of your taxable goods and services, where you add 10% to the cost of these goods and services in order to pay the tax.
- Business income tax: For sole traders, this is simply your personal income tax, which is scaled according to income. For company owners, this is separate to BAS and must be paid annually at tax time at a rate proportionate to your business size and turnover.
- PAYG: The deductions from the gross wages paid to any staff you employ.
Other important things you need to know:
- You must register for GST if you expect an annual income of $75,000 or more.
- If you register for GST, most businesses will need to file their BAS four times per year.
- Single touch payroll (STP) is coming from 1 July 2018 for businesses with 20 or more staff, and from 1 July 2019 for businesses with 19 or fewer employees. You will need to use online accounting software like MYOB or Xero, and if you won’t be ready you will need to apply for an exemption as soon as possible. You can read our guide to STP here.
Know your deductions
The key question to ask yourself is: can I justify this expense? Some common deductions include:
- Home office expenses for sole traders, for a part of the costs of owning, maintaining and using your home for your business.
- The decline in value of your depreciating assets that help you run your business, like computers and cars.
- Operating expenses for the income year, like online and website costs, office stationery, and specialised work clothing.
Some things can’t be justified, and the tax office could enforce repayments and penalties for items such as:
- Buying your business.
- Self-education, meals and entertaining, raffle tickets, and childcare expenses, among a long list.
- The full cost of expenses like office space and phones, when they should be apportioned between personal and business use.
- Travel between work and home, no matter how far it is.
Get your documentation ready
Consistently documenting your expenses throughout the year will save a lot of hassle come tax time. In particular, you need to have a robust recording method that discloses the amount of private use of any vehicles and spaces you are claiming for tax purposes.
The $20,000 instant asset write–off
The popular instant asset write-off was extended last year to businesses with annual revenue of up to $10 million. If you don’t have a write-off for this year, don’t stress – it’s been extended to the 2018-19 financial year. If you do have a purchase in mind, why not talk to Prospa about funding it with a small business loan.
Get set to offset
Did you know there is a small business tax offset that could save you $1,000 dollars each year? Check out the ATO’s calculator to see if you qualify for the saving.
Pay staff super
You are required by law to pay all staff superannuation by 30 June – and if you don’t, it’s not tax deductible. Super must be paid to staff 28 days after the end of each quarter.
Watch out for the watchlist
The ATO releases its target areas each February. This year they’ve warned businesses to keep receipts, as they will be closely watching ‘other’ expenses. And that’s not all – they’re even keeping an eye on social media to ensure people’s lifestyles match their incomes.
Use our all–in–one EOFY tool
This year, we’ve planned ahead and created the essential all-in-one EOFY tool for small businesses. Our smart tool lets you track and record all your regulatory requirements for financial year-end, including BAS, PAYG, super and employee salaries, and use the checklist to make sure you’ve ticked all the boxes.
Now that your tax affairs are in order, it’s time to assess your capital requirements. Speak to Prospa on 1300 882 867 or apply online for a loan to help grow your small business.