Tax is certain, but it can be managed. Many small business owners miss concessions they are entitled to, or claim things they shouldn't because of poor information. These five habits help.
1. Keep a record of every expense
Record every business expense, including the ones you pay from your own pocket. Keep receipts and invoices with your accounting records. The ATO generally expects you to keep business records for five years.
2. Plan for retirement
Running a business can absorb every dollar and every hour, but retirement still comes. Super contributions can be tax-effective, and some can be claimed as a deduction, within annual caps. The caps change, so check the ATO's current figures, and talk to your accountant or a licensed financial adviser before you decide.
3. Keep business and private spending apart
Private expenses aren't deductible. Use a separate business bank account and card so the line between the two stays clear.
4. Check the rules for assets you buy
Small businesses may be able to deduct the cost of some assets sooner than usual under the ATO's simplified depreciation rules, including the instant asset write-off when it is available. The thresholds and dates change from year to year, so check the ATO's current rules, or ask your accountant, before you buy.
5. Lodge and pay on time
Late lodgement can bring penalties, and late payment attracts the general interest charge. If cash is tight, talk to your accountant early: the ATO may agree to a payment plan.
Talk to your accountant about the tax rules that apply to your business this year.