This year, the tax office says it would focus on resolving a variety of common issues with small-business tax filings, such as ensuring small firms distinguish between private and commercial activity.
Taxation is a headache for all small businesses and self-employed individuals. You want to be out there working and making money. Instead, you’ll need to spend time calculating costs and earnings, filling out BAS forms, and dealing with whatever other paperwork comes your way.
It’s critical to have your tax under control so you can avoid potentially harsh fines and ensure you’re not paying too much tax. Unfortunately, small businesses make a lot of mistakes. Among the notable examples are:
1. Having Incomplete and Missing Tax Invoices
The ATO says that it’s important to have complete and accurate tax invoices to support your deductions. This means ensuring that your tax invoices include all the necessary information, such as the name and ABN of the supplier, a description of the goods or services, the date of the supply, the amount paid or payable, and the GST amount.
2. Failing to Account for Private Use of Business Funds or Assets
The ATO says you can’t claim a deduction for any private use of business funds or assets. This includes using your business car for private purposes, or claiming a deduction for the interest on a business loan used to purchase a private asset.
3. Failing to Keep Stock Records
If you’re in the business of selling goods, the ATO says you need to keep accurate stock records. This includes keeping track of the quantity of stock on hand and the cost of purchasing the stock.
4. Failing to Record Sales Through a Cash Register
If you have a cash register, the ATO says you need to ensure that all sales are being recorded through it. This includes sales of goods and services, as well as any refunds or voids.
5. Not Keeping Track of Changes to Tax Laws
The ATO says it’s important to keep up to date with any changes to tax laws that might affect your business. This includes changes to GST, fuel tax credits and other taxes that might apply to your business.
6. Not Getting Help From Tax Specialist
The ATO says it’s important to get help from a tax specialist if you’re unsure about something. This could be a registered tax agent, accountant or the ATO itself.
A tax specialist can help you accomplish a bunch of things. They can:
- help you understand your obligations
- complete your tax return
- advise you on how to structure your business
- help you minimise your tax
7. Not Making the Most of Tax Incentives
There are plenty of tax incentives available to businesses and individuals. You could be missing out on valuable tax deductions or incentives because you don’t know they exist or don’t understand how they work. If you are a small business owner, make sure you understand the small business tax incentives available.
There are a few key tax mistakes commonly made by small businesses. These include failing to file quarterly estimated taxes, not taking advantage of available tax deductions, and not keeping good records. By being aware of these mistakes and taking steps to avoid them, small businesses can save themselves a lot of money and hassle come tax time.
SMB Accounting is fast becoming one of the leaders in Australia when it comes to providing accounting services. As an accounting firm serving Brisbane, Sunshine Coast, and Fraser Coast, we help clients by providing business advice, taxation, and XERO/MYOB/Quickbooks consulting. Whenever you need help managing your income tax returns or keeping your finances in check, SMB Accounting is the one to call. Contact us today to get started.