Tax… It can strike fear in the hearts of many business owners. And it doesn’t help that tax time generates more myths than an ancient Grecian odyssey.
As the owner of a growing business, you’ve got enough on your plate without worrying about incorrect tax advice. Not to mention having to ensure you’ve got reliable systems, efficient processes, and expert support to make informed decisions with confidence. As your operations scale, you need to be able to trust that your numbers are accurate, up-to-date, and your business is compliant to avoid nasty surprises.
Not to brag, but we’re business tax professionals, so you’re in the right place! Let’s bust some of the most common tax-time myths, set the record straight, and make tax time a breeze as your business expands.
Myth #1: “I Only Need to Think About Tax at the End of the Financial Year”
Ah, the classic “see-you-next-June” approach. But a good tax system doesn’t just tick off compliance, it’s about strategy. If you’re only looking at your tax situation once a year, you could be doing your business (and your bank account) a disservice.
The tax landscape is constantly evolving. Government incentives, tax rate adjustments, and sector-specific regulations can impact your position. Staying informed (or working with an accountant who is) means you can take advantage of opportunities you may be completely unaware of, such as:
- Instant Asset Write-Offs: Depending on the latest government updates, you may be able to write off assets immediately rather than depreciating them over years.
- Superannuation Contributions: Strategic contributions before June 30 may be used for tax deductions and help future-proof your finances.
Regular check-ins with your accountant can help you take advantage of incentives sooner, structure your finances efficiently, and quickly troubleshoot issues.
Scaling up? Your Strategies Should Too
Also, as your business expands, engaging regularly with an accountant can ensure continued compliance, minimised tax liability, and support sustainable growth.
A growing business has a whole host of new things to consider that a qualified accountant can help you with, such as:
- Structuring for growth: Changing your business structure to accommodate growth, which can affect your tax, registration and legal requirements.
- Hiring staff: Covering all the compliancies that this entails, such as pay as you go (PAYG) withholding, payday super compliance, and worker classifications, to name a few.
- Managing tax liabilities: As revenue increases, so does your tax liability. Planning quarterly PAYG instalments can mitigate large tax bills.
- Registering for GST: Doing so at the right time can unlock strategic benefits and avoid penalties… but more on that next.
Myth #2: “Only Big Businesses Need to Register for GST”
The truth is, goods and services tax (GST) applies to more businesses than you think! Many small and medium business owners assume registering for GST is only for the big players. But if your business turns over $75,000 or more annually, you’ve met the GST threshold and are legally required to register.
Even if you’re not quite at the $75,000 mark, registering for GST early could be a strategic move. It allows you to claim GST credits on your business purchases and make your business look more established to clients and suppliers.
Plus, avoiding a last-minute scramble to register once you hit the threshold saves you from unnecessary stress. While you can register within 21 days of exceeding the GST threshold, failing to register on time can incur penalties and interest.
Myth #3: “Every Expense is Tax-Deductible!”
Wouldn’t that be nice? While plenty of business expenses are deductible, not everything qualifies. A coffee machine for the office may be deductible. Your daily latte habit from the local cafe? Sadly, not so much.
The Australian Taxation Office (ATO) keeps an eye on deductions, and claiming personal expenses as business ones can land you in hot water. A good accountant will help you navigate this to ensure you maximise your deductions without overstepping the bounds of what’s acceptable.
Myth #4: “I Don’t Need to Worry About Record-Keeping — I Have an Accountant for That”
Your accountant might be a total numbers wizard and tax virtuoso… But without accurate and up-to-date data? Well, there’s only so much they can do.
While a shoebox full of crumpled, faded receipts or an end-of-year data dump is better than nothing, it isn’t ideal. Accurate and consistent bookkeeping helps your accountant help you claim the right deductions, manage your cash flow, and avoid penalties.
If you haven’t already, you may want to think about investing in reliable accounting software as your business scales. It can make keeping on top of the books easier and allow for more efficiency. And should you ever be hand-picked for an ATO audit, you’ll have an easier time with rock-solid records at your fingertips.
Be sure to keep your receipts for business expenses. Or even better, upload them into accounting software too. While the ATO allows for a total claim of work expenses up to $300 with no receipts, you’ll still be expected to show how you calculated the claim amount and how the money was spent. It’s best practice to keep receipts where you can and it makes the claims process easier. Not to mention the potential to claim more if you’ve spent over $300 in business expenses!
The Bottom Line
Tax doesn’t have to be painful. Proactive planning, the right strategies, and ongoing support can ensure your business is in the best possible position and forego the headache that tax time can bring on.
A solid foundation can help set your business up for long-term success. As your business grows your financial systems need to scale with you. Having regular financial reviews, accurate data on hand, and a knowledgeable accountant gives you the confidence to make sound decisions for the future.
So, don’t wait until June. Get in touch today!