A Small Business Owner's Guide to Tax Deductions
As a small business owner, you’ll perhaps do everything in power to save money. Luckily there are plenty of ways, such as tax deductions and concessions. Running a business keeps you preoccupied 24/7, so it’s easy to overlook all the probabilities of saving money. Many small businesses remain unaware that the government offers plenty of options that reduce annual tax bills. There are plenty of more ways, and this simple guide explores some of those viable options. Let’s start!
1 - Review possible tax deductions
You’re well aware that tax deductions reduce income, which is taken off total assessable income. Paying your tax happens through what’s left of the said income and unfortunately, you aren’t reimbursed for tax deductions. You can, however, claim tax deductions for certain expenses, particularly those incurred in business operations. There are exemptions—first, that they are not private; and second, that they are domestic expenses (childcare fees). Keep in mind that fines and entertainment expenses are also excluded. Here are some business expenses that may be claimed by small business owners like you:
Fringe benefit tax
Business travel expenses
Salary and wages
Repair and maintenance
Advertising and phone costs
Fringe benefit tax
Motor vehicle costs
2 - Identify if your business qualifies for concessions
According to the law, a small business qualifies for tax concessions if the annual turnover is less than $2 million. There are many types of concessions, so choose one that best suits your business. Here are some of the concessions you may qualify for:
Income Tax Concession: This enables small businesses to fully deduct what are deemed to be “professional expenses” from their respective assessable incomes
Goods and Services Tax: This applies to most goods and services, aimed at making tax-reporting less onerous and more flexible for small businesses
3 - Be proactive about procurement and depreciation
In small business settings, equipment serves as one of the biggest expenses. If you write off new purchases and the offload of old equipment, you will be able to reduce your tax burden significantly. In other words, if you wish to purchase vehicles, laptops, or other equipment, do so before the end of the year. This purchase can be declared as a higher expense (sometimes even at full purchase price!), mostly because the item will have had less time to depreciate. The same applies to other bigger purchases such as solar panels, automation investments, and other sustainable upgrades.
Regardless of whether you’re holding off your taxes for the next annual deadline or filing quarterly, prepare for taxes by keeping records. Document each transaction and small business deductions and concessions you’re qualified for. Any receipts should be kept, and for maximum efficiency of record-keeping, write down the business reason for each expense. Through this small guide on tax deductions, you’ll be able to save on taxes this year.
However, deductions can be tricky to deal with. As you identify which one is best for your small business, consult a small business accountant. For the best accountants in Gold Coast, reach out to us today We’ll make sure that your business complies with all regulations and avoid any penalties. Start saving the right way with us today!