Just because it’s October, doesn’t mean you shouldn’t be thinking about June! Don’t leave tax preparation for your business to the last minute so you’re stressed out, scrambling to get everything in order. To make things easier we’ve provided some simple and easy tips to follow, so that lodging tax doesn’t have to be torture!
1. Collate all your documentation
Ensuring all of your tax related business documentation is in order is definitely the most time intensive task involved with paying your tax. It’s crucial to have statements for pay-as-you-go (PAYG) withholdings, as well as goods and services tax and any deductions you’d like to claim. This information is necessary for preparation of your Business Activity Statement (BAS) so you can formally process your tax. If you are uncertain what documentation format is required by the ATO, they have an online guide outlining their specifications.
2. Arrange a consultation with your Accountant or Financial Adviser
Before you lodge your tax return with the ATO, contact your accountant and arrange a consultation. Your accountant has the expertise to help you filter through all of your financial data to find the relevant information needed to process your tax. It’s essential for your accountant to check over your bookkeeping in detail, to ensure there have been no mistakes made in your financial reporting that could result in you paying too much or too little tax and worst case scenario, being audited. The earlier in the financial year you do this, the better.
If you install superior business accounting software like MYOB and Xero to streamline your accounts, it makes this process much simpler. Business accounting software enables you to have access to detailed financial summaries and account statements, as well as in-depth analysis of financial trends.
3. Time to spend some money!
If your accountant gives you the green flag that you have funds available in your business accounts, make sure you spend some money on improvements to your business or business practices. By spending money you essentially save money, as the more you spend, the lower your tax liability. Another way of saving money at tax time is to pay for all your business utilities during the year, such as phone, power and rent, then you can have a further deduction when you file your tax return.
4. Look after your debts
It’s important to pay back any personal loans you’ve taken from the business before tax time, so that you won’t end up with a hefty increase in your personal income taxes. Also speak to your accountant about writing off any bad debts, so you can get a further deduction for the current tax year.
5. Assess your assets and inventory
Check your business inventory and if any is expired or obsolete, it can be written off on your tax. If you find the current value of your business inventory is lower than the amount you had at the beginning of the year, this can also be deducted as a business loss.
For further tips on tax planning and managing your business accounts, contact your Accountant and or Financial Adviser – the earlier in the year the better!