5 Tax Time Tips for a Business Owner

As a business owner, do you look forward to tax time or do you dread the thought of reconciling your books? If you own and/or manage a business, then you would understand that common feeling of anxiety around tax time, especially if you’re not prepared for those end of financial year obligations.

Over a 12 year collective period, where I have either owned or managed a business, I’ve learned that tax time is bearable and manageable with these following 5 tips, which I hope will be of help to you today:

1. Be Organised

Receipt BankOne of the best ways to tackle tax time is being consistently and thoroughly organised throughout the year. That means, balancing your books daily or as often as possible. Plus being on top of your accounts receivables and payables, your receipts and invoices.

Another aspect of being organised is having a clearly labelled filing system where all your bills, invoices and receipts are kept. Nowadays, you can use cloud storage to maintain all your paperwork.

XeroA great program called Receipt Bank is perfect for capturing your documents. You can download the app onto your phone and take photos of your receipts for example, then have this synced up to your accounting software. I use Xero cloud-based accounting and using these two programs together make being organised a breeze.

2. Keep Proper Records

As a business owner, you must keep records of everything to do with your business for a period of 5 years. Here is a short list of what records you need to keep:

  1. Revenue and sales – tax invoices or record of cash sales;
  2. Expenses – tax invoices, credit card vouchers or cheque book receipts;
  3. Assets and liabilities – record of your creditors and debtors;
  4. Bank records – statements, loan or lease agreements;
  5. Employee and contractor records.

Tax Time

Furthermore, keep records of any calculations you make for your business making sure they align with tax law. Penalties may apply if you as a business owner don’t keep proper records.

3. Submit Your BAS Every Month or QuarterBAS

If your business is earning more than $75,000 per year, it is a requirement by law that your business is to register for GST. This is done through the Australian Taxation’s Office (ATO) online business portal.

Furthermore, it’s crucial to fill out and lodge a business activity statement (BAS) either on a monthly or quarterly basis.

BAS is then used for:

  • reporting and paying goods and services tax (GST);
  • pay as you go (PAYG) instalments,
  • reporting and paying PAYG withholding tax; and
  • any other applicable tax obligations.

Keeping up with lodging BAS’ will make your end of year tax time a lot more manageable.

4. Communicate with the ATO

I was in conversation with a young businessman recently who asked me, “do I have to inform the Australian Taxation Office (ATO) that I have changed my business details because I have already told the Australian Securities & Investments Commission (ASIC)?” The simple answer is, “yes”.

ATO

ASIC is a totally different government body to the ATO, however they both play an integral role in relation to setting up businesses.

If anything changes with the set-up of your business, such as:

  • new contact details;
  • new operating or postal address;
  • new member or director; or
  • retired member or director

then phone the ATO on 13 72 26 and update your business record with them. If you fail to keep the ATO in the loop, you may face serious consequences down the track.

5. Hire a Professional

BusinessAs a business owner, you may be reconciling your own books or have hired a bookkeeper to do this for you on a consistent basis, which is a great practise when done throughout the year.

However, when it comes to lodging your business’ tax income at the end of the financial year, it would be best to hire a professional such as an accountant, who can help you assess your legal obligations. An accountant will assist greatly in making sure your books are in order and your obligations are met in the correct manner.

SUMMARY

Hiring a bookkeeper or an accountant can greatly assist in submitting your BAS’ correctly. Make sure to contact and update the ATO if your business details changes.

If your business earns more than $75,000 per year, then register for GST and submit BAS’ either monthly or quarterly. Keep all records of your business activities and remain organised with your books.

It can be time consuming being on top of your accounts when you want to grow your business and do the ‘fun’ stuff; I have been there and know the feeling. But it is crucial that your tax time game is on point as your life and business will consequently run smoothly (and you can sleep well at night too).

“…but in this world nothing can be said to be certain, except death and taxes.” 
― Benjamin Franklin, USA’s Founding Father.

 

Disclaimer: The content within is general or publicly available information only. Speak with your accountant or financial adviser for advice on your specific circumstances or visit www.ato.gov.au

Beyond the Pacific

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2 Comments

  1. Reply

    Jenny Wolski

    July 5, 2017

    Hi Miriam, I have been following your Facebook page for a while. I want to say i am liking the content of your blogs, it’s very helpful. I’m thinking about starting an online business so the idea of doing tax freaks me out. Thank u for the tips! Very helpful, x Jenny.

    • Reply

      Beyond the Pacific

      July 6, 2017

      Hello Jenny 🙂 Great to hear from you. It’s my pleasure and I appreciate your feedback, so wonderful that you’re finding the content helpful. If you need some tips on starting an online business, check out my first vlog with Neil where he shares his 3 tips to success. Click here for the link. All the best with your endeavours. Cheers 🙂

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