How to Reduce Business Tax? Here Are 8 Tips to Help You Out!
Every businessperson's nightmare is to get a tax audit and pay more tax than necessary. Here is something we all have in common: we want to keep as much of our hard-earned money as possible.
As a small business, you have some options at your disposal to reduce your tax obligations. You may be wondering how you manage to stay on the right side of the law so that you don't have to pay taxes on everything you earn.
Use the Reduction in Company Tax Rates
A business that has less than $50 million turnover has a 27.5 per cent tax rate. That is, if the company’s assessable income is “passive,” it is 80 per cent or less.
On the other hand, if you have a Trust, you can put the profits to a “Bucket Company” and cap your tax at 27.5 per cent for the financial year. However, the company must qualify as a base rate entity to be eligible for this tax rate.
Pay Employee Superannuation
Getting a deduction for the current financial year means ensuring your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June.
It’s crucial you don’t make any last-minute payments because delays in procession may cause them to be received after year-end.
Time Your Income and Expenses
During tax season, you can minimise your tax payments by reducing your income and maximising your expenses. It’s all about the right timing.
It’s best to use accrual accounting for this to keep you on top of your expenses and income.
Pay Repairs & Maintenance
Do you still have repairs and maintenance expenses you need to pay? Reduce your taxes by paying them before 30 June.
Have a Business Vehicle Logbook
A logbook that contains information about business vehicle use for at least 12 weeks during the year will help you claim back vehicle expenses at tax time. This also means you need to keep receipts and invoices related to vehicle expenses.
Write Off Bad Debts
You can claim a tax deduction if you can show that you have written off a bad debt by June 30. Put everything in writing as you can use this as evidence that the debt was written off before the specific tax date.
Get a Property Depreciation Report
If you own a rental property, you can get a Property Report. This will help you claim the maximum amount of depreciation and building write-off deductions.
Keep on Top of Your Financial Paperwork
Running a small business is tough, but if you want significant tax reductions, make sure to always keep all your records. This may be too much for you, what with everything on your plate, but it’s vital you keep on top of all paperwork.
Significant business tax reductions are a godsend. Use these tips to help you reduce your taxes. Consider professional assistance as well to help you through the process and eliminate the feeling of overwhelm. Fortunately, a reliable accountant can help you get the business tax reductions you need.
Let a reputable accountant on the Gold Coast take care of managing the taxes of your small business. Our end-to-end accounting and bookkeeping services will help grow and scale your business. Contact us today.