Are you considering starting a small business? Then a consultation with one of our accountants to identify what you really need to know, and what to look out for is essential. Our list of questions every small business owner should ask can be accessed here. Asking these questions will ensure your manage your small business well.
Lets face it, for many small businesses, tax can be a complicated area and many have a tough time understanding tax law and using it to their advantage.
Using our services will provide you with some insight, as professional accountants will look at your personal and business circumstances and make recommendations that will get you the best results.
By taking the process on yourself, you may be saving money in the short term, but you're likely to not get the best outcome for your business.
Structure is one of the more important strategies to consider for your business - whether you're a sole trader, partnership, trust or company. The structure will determine how the net income of your business is taxed, each ownership model is very different.
GST is another important consideration for many small businesses - as a small business if you're sales are more than $75,000 annually, you will be required to register for GST and prepare and lodge Business Activity Statements with the ATO.
Employees add yet more complications, the most common issue being Superannuation Guarantee Legislation. Talk to our accountants to make sure your business is compliant with relevant super rules for employers. While you're at it, find out how to calculate the appropriate rates of withholding tax that will apply to wages paid. There can be serious repercussions from the ATO if you're not remitting super and tax correctly.
Record keeping is necessary for small businesses and a requirement of the ATO, however it can be a confusing to maintain, but proper accounting can save you serious time and money when you're getting ready to lodge your Tax Return. There are quite a few accounting software products on the market that can help you maintain your earnings and expenses, so ask your accountant which one they recommend for your business. If you're already using one, ask them if you're using all the functionality appropriate to your business.
Deductions can be confusing for a small business and sometimes there is a fine line between what can be considered a business expense and what is a personal cost. A motor vehicle is a good example because there are many methods available for claiming a deduction for motor vehicle expenditure and each varies according to your usage.
Home office expenses can also be another confusing area for small businesses. If you have an office in your home where you handle bookkeeping and general business administration, certain running expenses can be apportioned based on the size of your office to your home and claimed as a business expense, talk to your accountant to find out what you can claim.
Depreciation if constantly changing and from 1 July, 2012, the small business instant asset write-off threshold has been increased from $1,000 to $6,500. This means that any asset you may have bought recently could be fully expensed in the year of purchase rather than having to write it off over its useful life. It would be a good idea to have a list of your equipment purchases handy so your accountant can advise on the appropriate tax treatment and depreciation rates.
In a nutshell, small business is not necessarily simple, the issues discussed above are some of the more important areas to consider in relation to the taxation affairs of small businesses, there are many more.
When it comes to business accounting and tax, a DIY job is risky and you could end up paying substantial fines if you get it wrong or miss out on opportunities to minimise your tax. Take this into consideration before moving ahead with your strategy.
Lockwood & Ward can help you to sort out your small business affairs. Our experience and expertise allow us to be in the best possible position for providing you with the advice and direction in this area. Contact us on 02 9299 7044 today.