With the end of financial year traditionally a busy time for business, it is a smart idea to start preparing your business tax return as soon as possible. Here is just some of the paperwork you’ll need to start pulling together.
Report your income, expenses and assets
To ensure your records are compliant, you’ll need to accurately report your income, expenses and assets.
- Money in: Sole traders and small businesses need to provide a record of income received. This includes invoices paid as well as any revenue generated from investments such as rental income or shareholder dividends.
- Money out: Small business owners often pay more tax than required simply because they fail to record all the deductions they’re entitled to. These are typically divided into operating and capital expenses. Operating expenses are things like office stationery and wages; capital expenses refer to office buildings, machinery and equipment.
- Money made or lost through asset sales: Capital gains tax can be a blind spot for small business owners. This tax is applied to any profit you make from selling an asset – be it a company car, property or shares. (On the plus side, you can also claim a capital loss if you lose money on the sale.) It’s essential to record the details of any asset sales or acquisitions you make during the financial year so you can correctly calculate your capital gains or losses. To get an overview of all your accounts, simply log on to NetBank or CommBiz to access and generate financial statements.
GST and superannuation compliance
When tax time rolls around you’ll also need to ensure your Business Activity Statements (BAS) and Superannuation Guarantee (SG) contributions are up to date.
- Business Activity Statements (BAS): All businesses registered for GST are required to lodge monthly or quarterly Business Activity Statements. These are used to track your GST, PAYG and PAYG withholding tax payments. You can log into the ATO Business Portal to check that yours are up to date.
- Super Guarantee (SG) contributions: If you employ people in your business you will in most cases, be required to make superannuation contributions on their behalf and these contributions need to be reported to the ATO as part of your tax return. Use the SG contributions online calculator to work out your SG responsibilities.
Double check to ensure you have the correct information
Tax tables can help calculate how much tax you need to withhold from salary payments to your employees. These are regularly updated by the ATO, so it’s important to check them frequently to ensure you are meeting your tax requirements. The ATO’s tax withheld calculator provides helpful guidance.
Once your business records are up-to-date, be sure to check out the next article in this series, where we’ll share tips for reducing your tax liability this financial year, plus ways to improve your financial position for the year ahead.