Simplifying your Business’ Tax Obligations
Starting and running your own business can be challenging, exciting, daunting, or even overwhelming at times. And that’s just in carrying out the day-to-day operations of the business, let alone the mountain of compliance requirements and paperwork required to keep everything above board. The shifting landscape of tax and compliance legislation can make it tough to stay on top of things – but there are a few ways to stay off the ATO’s radar without the headaches.
Understand Your Business’ Obligations
It makes sense that to be fully compliant with tax legislation, you’ll need to understand what’s required of your business.
- TFNs and ABNs: All businesses, regardless of their structure, must have a Tax File Number (TFN). Sole traders use their individual TFN for their business; while those operating as a company, trust or partnership will need to register a separate TFN for the relevant entity. All businesses must also have an Australian Business Number (ABN) in order to undertake business operations.
- Paying Wages: Those paying wages or salaries must register for Pay as You Go (PAYG) withholding, and also understand their Superannuation Guarantee obligations.
- GST: Businesses buying or selling goods or services, with an annual turnover greater than $75,000, must register for Goods and Services Tax (GST).
Maintain Regular and Thorough Records
Getting lost in the busy daily routine means many business owners find it hard to maintain their records and paperwork that they’ll need come tax time. These can include invoices & receipts, statements, logbooks and plenty more. Letting this slide can make tax time more stressful than it needs to be. Avoiding the hassle is easy to do if you maintain your records throughout the year.
The development of logbook apps and services such as Receipt Bank (available in the MP+ App) make it easy to record and store your important business documents electronically, rather than needing to painstakingly sort through piles of paper. The integration of these apps with cloud accounting software further speeds up the processing of things like receipts so your deductions are not only easier to make, but also more accurate (more on that later).
Open and Operate a Separate Bank Account
Having a business bank account isn’t a requirement if you’re a sole trader – but it often makes life easier. Tracking and controlling income and expenses is where some great time savings can be found, and maintaining a separation between your business and personal finances makes the right financial records and information at tax time much more accessible.
Know What Deductions You Can Claim
Like all taxpayers, business owners seek to legally minimise their tax obligations and maximise their deductions. However, many have come under scrutiny from the Australian Taxation Office (ATO) if they make dubious tax claims – irrespective of the intention. This reinforces the importance of ensuring that records are up to date and the business is tax-compliant, and also highlights the need for business owners to stay on top of what they are legally allowed to claim a deduction for, and the various limits and conditions around those.
See the Experts
Perhaps the easiest way to remain compliant in your business is to leave it to the experts. Working with an accountant or bookkeeper ensures that someone with up-to-date, practical knowledge of the complex Australian taxation system is taking care of your tax obligations. The CFO2Go and Accounting teams at McKinley Plowman have established a reputation for providing excellent service, offering industry-leading knowledge and advice, and transforming the operations of countless businesses.
If you’re ready to take your business to the next level, contact McKinley Plowman today on 08 9301 2200, or visit www.mckinleyplowman.com.au.
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