Small businesses are some of the most important contributors to the Australian economy—they employ around six million people, with this number growing more and more each year. Because of this, small businesses are also important in the tax system. In fact, about 30 per cent of all income taxes come from them.
As a small business owner, you should make sure that you are familiar with business taxes, so you can make sure you are complying with all of your obligations. Continue reading to learn more.
The Basics of Small Business Taxes
In terms of taxes, a small business is defined as a business with an annual turnover of less than $10 million, except for small business CGT concessions, where the turnover threshold is $2 million. Your business tax requirements will depend on the type of business you run and how many employees you have.
When you start a business, you need to seek advice from the Australian Taxation Office (ATO) or a tax professional. The ATO is the government entity responsible for administering tax laws, so seeking advice from them can help you avoid mistakes that can result in financial penalties or legal battles.
Here are the things you must consider when managing your business tax affairs.
Capital Gains Tax (CGT) — Applies to any capital gain made through the disposal of assets
Goods and Services Tax (GST) — A national consumer tax applied to goods and services consumed in Australia
Payroll Tax — A state tax on the wages paid to employees
Income Tax — Taxes on your income after deductions
Tips for Small Business Taxpaying
To avoid mistakes in paying your taxes, you can consider the following tips:
1. Review Your Business Structure
Your business structure can overcomplicate the computation of your tax obligations. If you want to do it right, make sure to simplify your business structure and seek help from experts to choose the best structure suited for your business.
2. Make Sure Your Financial Reports are Accurate
When you report your business income, make sure every single entry is accurate. Include everything, even assets paid in cash or to a private account. ATO will find out hidden activities anyway, so make sure you are transparent about your income and expenses.
Moreover, when you subtract the deductions, only use those that relate to your business and be ready with evidence to support your claims.
3. Keep Good Records
It is also important that you practice excellent recordkeeping from the get-go. If you can, invest in tools that can help you keep records like accounting software, point-of-sale systems, and other apps. With these record-keeping solutions, you can save time and ensure the accuracy of all your financial reports.
4. Seek Advice from Tax Professionals
Mistakes in tax reporting and filing can be costly for your business. So, before you start, make sure to seek advice from a tax professional. You can opt to partner with a tax agent, a small business accountant, or a bookkeeper registered with the Tax Practitioners Board. Then, make sure you regularly set appointments with them every step of the way.
Paying small business taxes helps boost the economy, so you must do your part as a business owner. Because all the details can be complicated and mistakes can take up time and money, it would be better to work with tax experts like accountants and bookkeepers.
If you require an accountant for your online business, you can seek help from The ECommerce Accountant. Our team can provide you with an eCommerce tax accountant to help you manage the accounting services you need for your online store. Contact us today for more information.