Because of the ongoing COVID-19 pandemic, many governments have imposed restrictions across the world, which has severely affected the economy. With the pandemic still active, you may be worried about the financial health of your small business. But the small business tax return can prove to be a silver lining amid such a tough economic situation as it will help your business get the cash that is badly needed at this moment. This blog discusses all the tips you can consider to get the most out of your tax return this year.
Hire a tax professional for valuable advice
You must seek advice from a tax accountant who can offer you valuable advice about filing tax returns. Using their advice, you can easily avoid big mistakes. Remember the following points while hiring an agent.
- Ensure the bookkeeper agent, tax agent, or BAS agent you have hired is registered with the TPB (Tax Practitioners Board).
- Once you choose your agent, you must always keep in touch with the professional so that they can understand your business situation and offer advice accordingly.
- If you are not certain about a specific business area or want to make changes, you must either check the ATO website or ask your tax agent in Perth.
Check the structure of your business
Business structure plays a vital role here. Your tax obligations may also become complicated if your business structure is complex. Therefore, you must talk with your tax agent to check if your business model suits the business needs.
Know what expenses you can claim
Though economic recoveries are made, there is still a long way to go. Every small business in Australia needs to spend money on production and buying safety equipment. The reason is that without investing, you cannot generate significant revenue. So, when you have to claim tax deductions, you can claim every amount you have spent to keep your business running.
For the detailed list of services and goods you can claim as tax deductions, you must check the official website of the ATO. As per rules, you can claim all the costs incurred during the lockdown. The costs will usually be related to:
- COVID Safe PPE (personal protective equipment) kit used by you, your customers, and your staff
- Online courses you have done to enhance your business skills during the lockdown
- Newly installed technology that has allowed you to operate your business from home
- Accounting fees
In 2021, the Australian Government had introduced the Temporary Full Expenses, and Instant Asset Write Off schemes. Using these schemes, rather than depreciating over several years, you can claim an upfront tax deduction against most business assets, including computer equipment and furniture.
If the gross annual turnover in your business is less than $10 million, you will be allowed to claim an instant asset write-off on any business asset that values up to $20000. It means that it will be possible to buy an asset with a maximum value of $20000 until 30 June and include the full purchasing amount in the annual tax return.
You can take help from your small business tax consultant for more specific details.
You must maintain records
Maintaining good records is important, and it will help you report the claims more easily.
- You can talk to your tax agent or accounting software provider to confirm that the record-keeping procedures satisfy current needs.
- It can be good to conduct reconciliation processes regularly by cross-checking monetary amounts with the bank statements and source documents like tax invoices, receipts, etc.
- Consider using digital technology to run your company. There are many accounting systems, mobile applications, and point of sale software, which you can use to save time and produce accurate reports.
You must declare Job Seeker and Job Keeper payments in the return
Following the pandemic, tax return lodgment for Perth-based businesses has become more complex as the Federal Government has launched various support measures in response to the pandemic. Whenever you claim tax deductions, make sure you have declared Job Seeker and Job Keeper payments as business income.
For detailed information on COVID-19 financial packages, you can check the guide available on the ATO website.
You can take advantage of your unpaid invoices
With the economy having suffered significantly, small businesses found it really hard to pay off all the debts. As a result, many small businesses have unpaid invoices. But the good thing is that these unpaid invoices can be written off as bad debts.
If you have any unpaid invoices, are confident that these outstanding payments are not needed to be cleared, and you have attempted several times to clear them, these invoices will be referred to as bad debts. Writing them off can significantly minimise your taxable income.
However, as we have always pointed out, you must always discuss with your tax accountant to know how you can write off these debts.
Keep in mind that boozy lunches cannot be claimed
If you think you can include costs associated with pub lunches in your small business tax return, you will be wrong. Keep in mind that you cannot do it because it is rule-breaking, which can lead to fines as high as $360000. In some cases, accused business people may also end up in jail, so you must be careful about it.
It will be a good idea to determine which expenses you can claim and which cannot. Many small business owners make vital mistakes by including claiming costs associated with:
- Personal taxi or cab booking fares
- Client lunches or dinners
- Luxury bags that pose as laptop bags
- Uniform dry cleaning for non-uniform products
- Car costs over 5000km that are not recorded in a logbook
Where can you find tax agents in Perth?
There are several top-ranked tax consultancy firms in Perth that can help you find the best tax agent. Before the final decision, you can talk with multiple tax agents in your area to discuss your personal situations. Based on your requirements, you can choose your agent. However, you must not forget to check their registrations with the TPB.
