However big or small your business might be, you’re going to need some kind of tax plan to not only avoid any non-compliance issues but save money and stay financially stable, too. With that in mind, it’s not always the easiest process to navigate if you’re inexperienced or generally just too busy to put the necessary time towards learning about tax planning strategies, so we’re here to give you a hand with that.
Utilise Small Business Tax Concessions
So, Australia offers various kinds of tax concessions if you’re a small business, and these can play a major role in reducing your overall tax liabilities if you use them properly – the Instant Asset Write-Off, for instance, is one that lets your business immediately deduct the cost of pretty much any depreciating asset you might have.
Next is the Small Business Income Tax Offset, which fairly simply just gives you a tax offset of up to $1,000 per year on its own. And lastly, the Small Business CGT Concessions are another way you can find a lot of relief whenever it’s time to sell your business assets.
Structure Your Business Effectively
Choosing the right structure for your business – whether you’re a sole trader, running a company or partnership, or even a trust – is going to have a major impact on some of your tax implications since every kind of structure comes with its own tax advantages and requirements for compliance.
For instance, if you’re operating as a company, you’ll experience a much lower tax rate compared to individual income tax rates – trusts, on the other hand, come with a lot of flexibility here in the way of flexibility since you’re able to distribute the income across other beneficiaries which reduces the overall tax burden.
Claim All Eligible Deductions
Finally, Australian tax law allows for quite a few different deductions for any kind of business-related expenses, including things like:
- Operating expenses
- Rent
- Utilities
- Salaries
- Depreciation on assets (as mentioned earlier)
As a result, we highly recommend that you’re documenting (meticulously, so you can always prove them) and claiming every kind of deduction you’re eligible for if you want to minimise your taxable income – again, it’s imperative that all your records are accurate here so you’re actually able to substantiate these claims in case you’re ever audited.