Tax Tips


Want to avoid paying more than you should come tax time?  Or a frantic last minute search for missing financial records?

New business owners have a lot on their plate, and can easily lose track of an approaching tax deadline or financial data needed to submit their return.

Organization is key when preparing for tax time, as is taking advantage of the many tools and resources out there to support new entrepreneurs.

Set yourself up for success by following these four pillars of painless tax prep.

1.    Commit to clean bookkeeping from day one

Year-round, effective bookkeeping is the best way new business owners can minimize tax season stress.  With the wide range of accounting software out there, there’s no reason to rely on time consuming manual methods that leave room for error.

All-in-one options like Xero, KashFlow and QuickBooks automate your most important bookkeeping processes, including:

  • Tracking expenses;
  • Tracking sales and income;
  • Creating and sending invoices; and
  • Managing inventory.

With your financial records all in one place and up-to-date, you’re better positioned to maximize your refund, while avoiding penalties associated with incorrect or incomplete tax returns.

2.    Capture every business expense

Each year, 21% of small business owners claim less than half of their business expenses, largely because they don’t have a reliable system for documenting expenditure while on the go.

Without carefully logged receipts, entrepreneurs must forfeit valuable tax deductions, sacrificing cash they could be funnelling back into their business.

Cash in on claimable expenses by using a mobile app to record receipt data, track mileage and generate expense reports.  As an added bonus, many of these tools sync with your all-in-one accounting software.

3.    Separate business from personal

Right from day one, small business owners should clearly divide their personal and business expenses.  Differentiating between the two will make it much easier to claim deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:

  • Create a separate bank account for your business and designate a credit card solely for business purposes (this will help you track expenditure while building up your credit and borrowing power);
  • Never combine business and personal expenses (for example, if you buy printer ink for your home and your business at the same time, ask for two separate receipts);
  • Pay yourself a set salary from your business bank account each month (this will help you determine how your income, as well as the business, will be taxed).

4.    Always consult with an accountant

Not sure exactly what you can claim as a business expense?  Wondering which accounting software to use or how to interpret local tax regulations?

Consult with an accounting professional to put your mind at ease – well before the filing deadline!  In addition to managing the nuts and bolts of tax preparation, regular meetings with an accountant will help you continuously improve bookkeeping practices and better understand the financial workings of your small business.

Those organizational strategies you commit to now will promote positive relations with your local tax authorities – and the long-term financial health of your company.

If you want help and advice to manage your small business tax then speak to the experienced team at BSN & Co.  We have helped many small businesses so book a free no obligation meeting today!

Tax Tips for Small Business Owners

Preparing for tax season really is a year-round endeavour for all small business owners, so here are few tax tips.  Tip number one is to update financials on a monthly basis, using a streamlined software or cloud-based system.

This way, come tax time, everything you’ll need is all in one place and you’ll be better positioned to minimize your tax bill while avoiding penalties associated with inaccurate information and/or late lodgements.

Here are four more ways to take the stress out of tax time, and get the most out of your return.

Know your credits & deductions

Small businesses typically benefit from a wide range of tax credits, from special allowances for research and development, to programs that supplement wages for student employees and apprentices.  Knowing which credits apply to your business can save you a bundle on taxes.

It’s also important to be savvy about deductions.  After all, you want to keep as much of your hard-earned revenue as possible.  Deductions that are often overlooked include:

  • Seminars, courses or conventions you attended to improve your professional skills;
  • Unused inventory that you’ve donated to charity (a good reason to consider donating your excess stock, rather than paying for storage); and
  • Capital assets such as office furniture, computers, and equipment.

Speak to your accountant about the full range of available deductions so you can plan ahead for each tax year.

Be careful about what you claim

If you run your business out of your home, you may be able to claim a portion of expenses like utilities, insurance, property tax and rent.  But you’ll need to keep good records and all your receipts to justify why you’ve allocated business costs to your home office.

The same goes for home office computers and mobile phone expenses. The ATO will want to see how you’ve separated the personal and professional use of these assets when you claim them as work expenses.

Want to claim travel to and from work as an expense?  Ensure you submit a log of your business-related kilometres so you can clearly demonstrate how your personal vehicle was used for business purposes.

Don’t miss the deadline!

This should go without saying, but every year businesses are hit with severe penalties for late lodgements. Missing the deadline can have negative repercussions, including:

  • Added interest to amounts already owing, plus a late lodgement penalty; or
  • Delay of loan approvals (lenders require a copy of your lodged tax return in order to process your application).

Seek expert advice well in advance

A recent survey of small business owners found that many don’t understand their tax obligations.  What’s more, 27% only speak to their accountant at the last minute, just before the lodgement deadline.

Software has made it easier than ever for small business owners to keep on top of their record keeping, but when it comes to thoroughness and accuracy, nothing can replace the expert advice of an accountant.  Consult one well in advance to ensure you’ll get the most out of your tax return and that your documentation is complete.  On the bright side, accounting fees are often tax deductible!

Speak to us today!  We are small business and tradies tax specialists and can help you pay the least amount of tax possible.  Call us now and book in for a FREE, no obligation tax review.  Take action now and keep more of your hard earned money in your pocket.