WHAT EVERY SMALL AUSTRALIAN BUSINESS NEEDS TO KNOW ABOUT TAX2 min read
The small business segment in Australia is often described as the economy’s driver and the country’s biggest employer. According to research, small Australian businesses were responsible for about half of the private sector employment. Additionally, the Australian Tax Office says that small businesses make up around 96% of all businesses, which explains why they are the driver of the economy.
Paying taxes is part of running a small business in Australia, and mistakes can cost you significantly in terms of money and time. Therefore staying informed and adhering to the Australian small business tax-paying regulations is essential for the success of your business.
If you run a small Australian business, here is all you need to know about tax.
Examine your business structure
An intricate business structure can complicate your tax obligations and make it challenging to meet them. Consulting a tax agent is advisable to ensure your business structure is right. According to the Australian Tax Office, a small business is one with a yearly turnover of less than a $10 threshold.
Seek professional guidance
Enlisting professional tax services and accountants is advisable to keep your small business on track and avoid making costly mistakes. Some of the best practices include:
- Find a BAS agent, tax agent, or bookkeeper registered with the tax practitioner’s board to help you with tax compliance.
- Always engage your tax professionals if you are unsure about something, especially when making business changes that may impact your tax obligation.
- Ensure regular contact with your tax professionals and keep them updated, so they understand your business and advise you accordingly.
Maintain accurate records
Maintaining accurate records of your small business makes it easier to meet your tax obligations and ensure everything is in order. Investing in software to ensure your bookkeeping meets current requirements and simplifies the day-to-day tasks of running your business regarding tax compliance is advisable.
To ensure accuracy, you should also perform regular inspections by cross-checking numbers with your sources like tax invoices, till tapes, and receipts with bank statements. Most importantly, incorporating technology into your business can simplify accounting and improve reporting. Accounting software, sales systems, and mobile apps are some technologies you can take advantage of.
Ensure your reporting is accurate.
When reporting, you must get your income and expenses right for your tax compliance. The figures you write should be accurate from the word go, so it makes sense to invest in automatic bookkeeping to avoid human errors.
Since government auditors use data matching and bench marking to pinpoint fraudulent activities, reporting your business income, even if paid into a private account or in cash, is advisable to avoid costly consequences. Always ensure that any tax deductions are directly related to your business and you have evidence to support that.
The golden rule remains: keep records of receipts, expense invoices, employee records, asset purchases, bank statements, etc. These records make it easy to verify transactions if need be.