Every registered business is expected to pay off its taxes. It does not matter how much they make; paying taxes is a responsibility every entrepreneur needs to carry to do business. Fortunately, if you are an SMB owner, you can explore several ways to minimise the tax you need to pay. This article would tell you the five ways you can save on business expenses:
#1: List down where your money is coming and going
A list is necessary for two reasons:
First, it helps you remember how your money flows. Record-keeping in a small business should be done as meticulously as possible to make sure you do not miss anything. While you’re at it, ensure that all the receipts under the pieces are well-kept so you can use them as a reference later. It is also your legal responsibility to keep all receipts and official financial records for several years.
Second, the Australian Tax Office (ATO) asks more questions about tax deductions now more than ever. It is essential to equip yourself with the correct information, especially when talking about your business. The records could help you understand and access your data better.
#2: You can deduct donations from your tax
If your company conducts charity work, you can add them to your tax deductibles. This option applies to initiatives that exceed $2. The best thing about this is that you can claim the amount you donated via your tax return. It does not have to be cash. The amount you donated would be deducted from your taxable income. Therefore, you get a reduced to-pay amount by the end of the business year.
#3: Have a list of the things you can claim as a tax deduction
You need to familiarise yourself with items that you claim as tax deductions, so you have an idea of what you can refund later. Some of these might be transportation expenses, item purchases for work, repairs and maintenance, operating expenses, salaries, wages, contributions, and more. Check out the complete list here.
As always, make sure that you have the receipts with you. If you have questions about items you can claim for your tax deduction, you can always speak with your tax consultant so they can explain everything clearly.
#4: Research and compare before making decisions
If you have no private health insurance coverage and you need to choose between a basic private health cover plan and a Medicare levy surcharge, always check the specifics of your options first.
In this case, individuals without insurance earning more than $90,000 who opt to get the Medicare Levy Surcharge would, in total, have to pay 1% more in addition to the 2% mandatory tax for Medicare.
On the other hand, if you compute and choose the basic private health cover plan, the total amount you need to pay for it would be much less than what you would pay for Medicare.
#5: Get a tax consultant or a dedicated accountant
These people already understand the ways you can reduce your taxes and business expenses. They could alleviate your worries about taxation and boost your savings on your taxes in entirely legal ways.
Learning the different ways you can lessen your taxes is nothing to be ashamed of. If it is legal, it does mean you are escaping from your obligations. In fact, the recommendations listed above were specifically made to help small-medium businesses minimise their tax liability and maximise their income. Use the money you save to grow your business, pay your debts, and make more investments.
To ensure that you have all the opportunities to deduct your taxes covered, make sure to seek SMB tax solutions from tax deduction tradesmen. Here at SMB+ Accounting, we offer a wide range of accounting services, including taxation, business advice, XERO/MYOB/Quickbooks consulting, and more. Get in touch with us to learn more about how we can help you.