Avoid the tax time scramble this year. Start collecting your paperwork now
The end of financial year is only six weeks away. If you’re a small business owner, now is the time to tackle your tax time preparation.
May and June tend to be a busy time for business and preparing your business tax return is one non-negotiable task you’ll need to fit in. Six weeks out from June 30, here is the paperwork you’ll need to start pulling together.
Report your income, expenses and assets
To ensure your records are compliant, you’ll need to accurately report your income, expenses and assets.
Sole traders and small businesses need to provide a record of income received. This includes invoices paid as well as any revenue generated from investments such as rental income or shareholder dividends.
Small business owners often pay more tax than required simply because they fail to record all the deductions they’re entitled to. These are typically divided into operating and capital expenses. Operating expenses are things like office stationery and wages; capital expenses refer to office buildings, machinery and equipment.
Money made or lost through asset sales
Capital gains tax can be a blind spot for small business owners. This tax is applied to any profit you make from selling an asset – be it a company car, property or shares. (On the plus side, you can also claim a capital loss if you lose money on the sale.) It’s essential to record the details of any asset sales or acquisitions you make during the financial year so you can correctly calculate your capital gains or losses.
GST and superannuation compliance
When tax time rolls around you’ll also need to ensure your Business Activity Statements (BAS) and Superannuation Guarantee (SG) contributions are up to date.
All businesses registered for GST are required to lodge monthly or quarterly Business Activity Statements. These are used to track your GST, PAYG and PAYG withholding tax payments. You can log into the ATO Business Portal to check that yours are up to date.
If you employ people in your business you will in most cases be required to make superannuation contributions on their behalf and these contributions need to be reported to the ATO as part of your tax return. Use this online calculator to work out your SG responsibilities.
Double check to ensure you have the correct information
Tax tables can help calculate how much tax you need to withhold from salary payments to your employees. These are regularly updated by the ATO, so it’s important to check them frequently to ensure you are meeting your tax requirements. The ATO’s tax withheld calculator provides helpful guidance.
Once your business records are up-to-date, be sure to check out the next article in this series. We’ll share tips for reducing your tax liability this financial year, plus ways to improve your financial position for the year ahead.
This is an article from the Commonwealth Bank of Australia please refer: