Accounting & Finance Business Tax

Small Business Tax Survival Guide: 7 Things You Need To Know

Written by Aiden Dallas

Tax time is always a hectic time for business owners as they rush to ensure their affairs in order and submit their tax documentation. Small businesses may be eligible for a range of tax benefits, so seeking out some expert business tax advice is a very good idea. By doing so you will avoid stress and potentially save your business a lot of money.

Here are 7 business tax tips every small business owner needs to know:

1. Deductions

It is vital that you ensure you are claiming all the appropriate deductions that you can. These range from utilities or repairs for your business, to professional, legal or accounting advice.

Getting business tax advice will ensure that you’re able to claim every possible deduction, so make sure you consult an advisor before submitting your return.

2. Superannuation

While you are required to pay super, it is one of the areas that you can claim a tax deduction. However, if you want to do so you will need to claim prior to the end of the quarter, otherwise the opportunity is gone.

3. Income Tax Offset

Did you know there is an income tax offset available for small businesses as well as sole traders?

This is helpful for small businesses or sole traders in the early stages of growth. The offset can deduct as much as $1000 off your tax bill, if your revenue is under $5 million. The premise of the idea is to support entrepreneurs who are ultimately going to promote innovation and productivity throughout the economy.

4. $20,000 Instant Asset Write-off

The crux of the instant asset write-off is that if you buy an asset and it costs less than $20,000, you are then entitled to write off the business portion in your tax return.

There are two eligibility criteria need to fulfill to claim the write off. Firstly, you need to have had a turnover of less than $10 million. The second is that the asset you are claiming for, was first utilised in the quarter you are wishing to claim it in.

This write-off could be particularly important for self-employed workers with a strong reliance on cash flow. The $20,000 threshold has been extended to 30 June 2019 however it will reduce to $1,000 on 1 July 2019.

5. Debts

Ideally, no business wants to ever be in a position where they are struggling to recover outstanding debts. If you do find yourself in this unfortunate position, there is a silver lining. It is possible to receive a tax deduction on the debt that you write off. Keep in mind that you must keep a written record documenting that the debt has been written off.

6. Trust Resolutions

At the end of the upcoming quarter, the company’s trustees of discretionary trusts must document resolutions outlining how income will be distributed to beneficiaries. If these resolutions are not made by the end of the quarter, all default beneficiaries will be subject to tax regardless of whether they receive cash distribution or not.

7. Accurate Records

Perhaps the most important tip in this list is to ensure that you or your company set up an efficient filing system. This can save you hours down the line when you are searching for records during tax time.

It will also be invaluable should your business undergo an audit. Under tax law you are required to keep records for five years which means you will have a lot to sift through if you don’t have an effective filing system.

The Next Step

Most small business owners are busy enough as it is without having to spend huge amounts of time on their taxes. Consulting an accounting expert to get some business tax advice at the end of the quarter will not only make your life easier, it will ensure that your business is in the best financial position for the next quarter.

“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."

About the author

Aiden Dallas

Aiden Dallas is a freelance content writer whose interests include blogging and copywriting.

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