Strategic Tax Planning Tips for Small Businesses in Australia

Small businesses certainly need to be able to adeptly spin multiple plates at once, many of which are perhaps not perceived by owners as crucial to day-to-day business operations such as lodging taxes, but that nonetheless must be done. Every small business operating in Australia is subject to taxation, which can take up valuable resources and lead to frustration if lodged incorrectly or with glaring omissions.

Over 50 years ago the lyrics “Let me tell you how it will be / There’s one for you, nineteen for me” (Beatles, Taxman) still ring true – well, perhaps not exactly down to the number. Nevertheless, the obligation to pay taxes is a legal one, and it’s an obligation that should be obeyed in order to maintain a legally compliant business operation.

How can small businesses strategically plan their taxes to minimise (legally) their burden whilst taking maximum advantage of any tax credits and/or deductions? Below are a few key tips:

Leverage Tax Deductions Whenever Possible

Perhaps the first and most important way to reduce your tax burden is to claim any and all tax deductions possible for your business. Many business owners fail to maximise these deductions and end up paying far more than they’d probably like, and knowing what is and isn’t tax deductible (and up to how much) is therefore crucial.

It is absolutely essential to keep good records, whether you intend to lodge taxes yourself or do so professionally through a tax agent. Receipts and invoices for business-related services and things like motor vehicles, supplies, rent/lease payments, and much more may be claimed, thereby lowering your tax burden.

Goods and Services Tax (GST)

Most goods and services in Australia are taxed at a rate of 10% for GST.  Businesses that have an annual revenue of $75,000AUD or more must register for GST and then add the GST to any goods or services sold to their customers.  

Upon registration, you must then complete Business Activity Statements, where you can gain credits for any GST you as a business have paid to your suppliers to purchase items for your business. In doing so, you may also be able to claim fuel tax credits – another potential way to reduce your tax burden 

Applying for GST is straightforward but don’t be confused thinking you must apply through the ATO – instead speak to a registered tax agent who can do this for you.  

Tax Offsets & Concessions

After maximising tax deductions, most small businesses still have some wiggle room to strategically plan for taxes. While there are many initiatives, schemes, and specific strategies that may be available to your business, some to consider include the small business tax offset and capital gains tax (CGT) concessions.

Taking advantage of these (and others) and managing them with the aid of a professional best tax accountant Melbourne may significantly lower your tax burden.

Plan for the Tax Year in Advance and Monitor Frequently

Taxes may seem like an annual hassle: get it done with and move on. As a business owner, it’s actually reasonable to move on to providing valuable goods and services, but there is strong merit to planning well in advance and evaluating throughout the year.

Review your business financials, and cash flow, and optimise your small business taxes with the assistance of a professional tax agency and make tax season a (relative) breeze rather than a frustrating last-minute scramble. Haste makes waste, as the saying goes, so leaving everything to the last minute can lead to errors, omissions, and poorly optimised tax payments that leave you paying substantially more than you may have anticipated.

Badawy Large & Powers

Choose Badawy Large & Powers for professional tax planning and consulting services.

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