Business owners may feel a little overwhelmed every end of the fiscal year. It is during these times that businesses need to carry out specific procedures to close their books and fulfill obligations to the ATO. For every business, staying on top of company tax obligations and ensuring that all necessary documents are complete in case of audit by tax regulators can sometimes be stressful.
Here at ACT Bookkeeping Group, we advocate to lessen the stress and worries of business owners like you. Here is a list of tax tips for small and medium businesses so you will be on top of your task load.
Keep Your Accounts Accessible, Accurate and Up to Date
It is necessary to make sure that your accounts are easily accessible to you and your bookkeeper so whenever you need to refer to it at times you need answers to urgent questions or you need to retrieve information; you get what you need right away.
Having accurate and up-to-date data is also very helpful when you need to make critical decisions about your company’s finances. That is why it is extremely important that you reconcile your accounts regularly.
Using a cloud-based accounting software like Xero can make updating your accounts an easy process. With Xero, you can directly connect your bank accounts to your books so you have access to information real- time. Your cash flow, revenue, outstanding invoices, and other key accounting elements are readily accessible and visible to you whenever and wherever you need to access them. This helps keep you informed, in control and ready for the essential tasks at the end of the financial year (EOFY process).
Understand GST Obligations
Goods and Services Tax can be a bit of a complex topic, but as a business owner, you need to understand your GST obligations and be aware of the relevant registration threshold.
ATO requires a business to register for GST when
- your business has a GST turnover of $75,000 or more (in gross income from all businesses minus GST)
- your startup expects the turnover to reach the GST threshold in the first year of its operation
- your previously GST unregistered business reaches the GST threshold.
If your business is not yet registered to GST, check each month to see if you’ve reached the threshold or have exceeded it. When this happens, you will need to register within 21 days pf your GST turnover exceeding the relevant threshold. Keep in mind that once you have registered for GST, your tax return should include your income and expenses net of GST and the GST component is handled on your BAS (Business Activity Statement).
Keep in Mind Instant Asset Write Off
Part of the COVID-19 stimulus package last year was the government’s extension of the instant asset write off measures for eligible businesses. ATO stated that “For assets first used or installed ready for use between 12 March 2020 until 30 June 2021, and purchased by 31 December 2020, the instant asset write-off threshold amount for each asset is $150,000 (up from $30,000)and eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).”
Furthermore, The ATO explains in the Temporary Full Expensing, that businesses with an aggregate turnover of less than 5 billion dollars can immediately deduct the business portion of the cost of eligible depreciating assets. Your eligible new assets must be first held, used or installed ready for use for a taxable purpose between October 6, 2020 and June 30, 2022 between 7:30 OM AEDT.
Be Sure to Pay Superannuation
You need to make sure that the Small Business Superannuation Clearing House (SBSCH) receives your employee superannuation payments on or before June 30 so you can claim tax deductions. Since the end of the fiscal year is a busy time, it is better to make your superannuation payments before the deadline. Last-minute deposits may experience delays and could end up rolling over year-end.
Too Busy? Our Team Can Help!
Staying on top of tax obligations may become challenging for business owners who are busy managing their own businesses. Getting the right advice on your ATO obligations can give you the time and resources you need so you can focus on growing your business.
Our team at ACT Bookkeeping Group is here to help you simplify the process of meeting your tax obligations. Contact us today and book a free consultation.