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Tips for managing small business tax

Tips for managing small business tax

Similar to many small business owners in Sydney, you started your business to earn a living, and not because you have experience in taxation or accou

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Similar to many small business owners in Sydney, you started your business to earn a living, and not because you have experience in taxation or accounting. One mistake can get you audited by the Australian Tax Office (ATO), and even if you are not audited, you can pay more in taxes than you are supposed to.

Small business owners need to be well prepared for tax season. Below we have compiled important tips to help you manage your business taxes.

Small business tax management

Hire a good accountant

Many Australian business owners find and hire good accountants to ensure the correct filing and payment of taxes. This will reduce the amount of time the employer spends on taxes and accounting. As a result, you can focus on improving your business and leaving the tax return to a professional. Consult tax return accountants in Sydney to stay stress free even before the submission deadline. There are several accountants in the market, so make sure you prioritize those who have worked with businesses of your size and structure. Check with other local business owners for recommendations.

Analyze Business Tax Credits

One of the best ways to reduce your business tax bill is through tax credits. Tax credits offer dollar-for-dollar deductions in your tax liability. Suppose you have a tax bill of $ 7,000, and your tax credit is $ 3,000. You will have a final tax liability of $ 4,000 ($ 7,000 provisional tax liability – $ 3,000 tax credit). When you give your employees retirement plans or subsidized health insurance, you qualify for tax credits.

Your business structure matters

How your business is registered affects how your taxes are paid. These are the most popular business structures; sole proprietorship, limited liability company (LLC), S corporation and C corporation. All of these business structures have their separate tax implications. Make sure you research all the business structures before registering your business.

Determine your tax liability

One of the first conversations you will have with accountants in Sydney will be to determine your tax liability, which will have an impact on how taxes are filed and paid. Each tax liability is special and is mainly informed by four elements; business structure, location, assets and the number of employees. The type and amount of assets can also affect a business’s general tax liability.

Accounting
photo credit: effens alles / Flickr

Make Accounting More Efficient

Efficient and easier accounting is the perfect way for small business owners to reduce the stress of tax season. With the wide variety of accounting software present, it is not necessary to use stressful manual methods that provoke errors. With your financial records correct and everything in one place, it will be easier to maximize your returns while averting fines associated with incorrect tax returns.

Separate personal and business finances

The first step to taking before starting a small business is to open a new bank account. One of the quickest and easiest ways to avoid tax problems is to record personal expenses as business expenses. Having a different bank account for your small business makes tax time much easier.

Tax time is always going to be a stressful time for small business owners who file and pay taxes themselves. These tips will definitely prepare you for the upcoming tax season. Whether you’re hiring an accountant, simplifying your accounting, or determining your tax liability, now’s the perfect time to start planning.

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