Top 5 Tax Saving Tips for Small Businesses

While maintaining your physical and mental health can help you live a longer, better life, financial planning and strategizing can help you lower your tax responsibilities. But, of course, everyone wants to pay as little as possible when it comes to taxes.

You could also get some help from companies like Taxopia, pop-business, or Tax-Summaries to save some on your tax returns.

What are the simplest methods to pay less tax in Australia this year? We’ve compiled a list of 5 of the simplest ways to pay less tax for small businesses.

Make use of a tax advisor

When filing your taxes, a professional tax adviser may save you a lot of time. They also have insider tax and refund information and industry expertise. As a result, you may receive the most outstanding tax refund possible without running afoul of the ATO if you hire a tax agent to assist you with your taxes.

Non-taxable income is not included.

Some income is considered exempt or non-taxable by the ATO, and you don’t want to mention it on your tax return. However, while calculating tax losses from previous years, some exempt income may be considered. Some of your income, as well as the adjusted taxable income of any dependents you have, can be deducted. The following items are considered exempt or non-taxable income:

• Some Australian government pensions, such as disability assistance pensions from Centrelink for individuals under the age of pension, are available to people under the allowance.
• Some government payments and allowances, such as childcare subsidies and caregiver allowance, are made by the Australian government. In addition, Federal Police and Australian Defence Force members get overseas pay and allowances.
• Education payments from the Australian government, including allowances for students under the age of sixteen. Specific scholarships, prizes, and grants
• Lump-sum payments from the surrender of an insurance policy, mortgage protection, or as payment for a terminal illness or work-related injury

Minimize your capital gains and taxes.

Taxes on capital gains must be paid in the year the payment is realized. On the other hand, losses can only be carried forward; they cannot be carried back. Therefore, you can reduce your tax liability for the current fiscal year if you prepay deductible interest.

Organize your financial information

One of the most important aspects of filing taxes efficiently and effectively is maintaining your financial documents up to date and organized throughout the year. There are two helpful methods to accomplish this. These are discussed in greater depth further down.

1. Cloud Accounting

Financial costs, earnings, profits, and losses are easy to track and compute using a cloud accounting system. Therefore, a small firm should use one to keep all of its financial transactions in one location.

1. Digital File Sharing

You may also share Google Excel files with your accountant and continue to keep track of transactions in them and you can get a free 1099 template for excel. This also makes it easier to add essential comments to entries. The Australian Taxation Office app, which allows you to quickly record your business travel-related logbook activities as well as receipts, is another method to stay on top of your tax returns.

Avoid using the company’s funds for personal gain.

Under the considered dividends regulations, if a shareholder borrows money from the private business whose stock it owns, the dividends will be unfranked taxable dividends. But, as a result, if they aren’t returned before the end of the tax year, they’ll be considered income and deducted as franked dividends.

Apart from that, considered dividend laws apply if a company asset is utilized for personal purposes for less than its market worth. As a result, one will be able to pay a forecasted price for the use of assets that is less than the actual amount.

Conclusion

Starting and operating a small business is a labor of love, although one can be challenging at times. It’s vital to take a pause and refuel, just like everything else in life. If you’re a small company owner, you might be wondering if you can take a vacation without feeling guilty. The trick is to plan. While working in a small business may not allow for spontaneity, planning ahead of time helps ensure that you are sweating the big things rather than the minor stuff.