Small Business Tax

With the carbon tax having taken effect on July 1 and expected to make an impact on a wide range of business-related expenses – from utility prices to travel – small businesses now need to be even more aware of their tax obligations, as well as a number of new entitlements which will help make the transition easier.


New Tax Entitlements

Last year, the Federal Government announced two major concessions for small business, both of which can be claimed immediately:

  • Motor vehicles – small businesses can claim up to a $5000 immediate deduction on a motor vehicle purchased in the 2012/13 financial year. The balance of the purchase cost goes into the business’ general small business pool, depreciating 15% in the first year and then 30% annually.
  • Other assets – immediate write-off of non-vehicle assets valued under $6500.

A recent MYOB survey found that 42% of small and medium enterprises are still uncertain about how the carbon tax will affect their operations. While most won’t be obliged to pay the tax directly, they still need to be aware of how it will impact them. A review of your tax situation is recommended, as is an audit of energy-intensive costs.

Easy Tax have been guiding small businesses with their tax and accounting issues for decades, and can easily assist you in these areas – by training clients in the use of accounting packages such as MYOB, Quickbooks or Xero, helping you identify maximum tax refunds, and more.


Small Business Tax Records

Lots of small businesses – especially one-person sole trader operations – still rely on basic spreadsheets for their expense accounting, maintain little or no cash flow records, and store receipts in a shoebox under the desk.

This can cause headaches down the line, especially when trying to calculate tax refunds. It also exposes the small business to significant risk, as the ATO can request tax records going back as much as 5 years.

For many small businesses that are still putting off getting their accounts in order, this year is a good time to invest in accounting software and seek expert tax advice. Easy Tax accountants would be happy to assist. Another tip – tax accounting is also a deductible business expense.


Tax Tips For Small Businesses

Check prior agreements – it is inevitable that many businesses will bump their prices upwards to compensate for additional costs from the new carbon tax. Before announcing a price rise to customers, check you’re not stepping outside any previous agreements.

Keep an expenses diary – a four week diary can be used to justify home office expenses – such as phone, internet, fax and heating – to the Australian Taxation Office.

GST – if your annual small business turnover is $75,000 or more, you must register for GST. You also must register if you provide taxi travel and/or want to claim fuel tax credits. Keep an eye on your income, too – if it exceeds the GST threshold you have 21 days to register, or be penalised.

Fuel tax credits –can be claimed for every 100 litres of fuel used, including fuel used in machinery, plant or equipment such as cement mixers or bulldozers. See the Australian Tax Office for a full listing.

Selling your business – if you sold a small business during the year, consider taking advantage of the small business capital gains tax concession and putting the proceeds toward your superannuation fund.

These are just some of the ways small business owners can optimize their tax and finances, taking care of their accounting issues and giving them the time they need to focus on building their business.

Whatever your situation, Easy Tax can guide you through your tax issues, with no tax return too late for us to handle. Backed by decades of experience working with small and medium businesses, we focus on finding and solving all your tax problems before they reach the Tax Audit stage, making your life easier.


Take advantage of our small business accounting services during which we will help you to refine your needs and consider an accounting and tax planning solution for your business going forward… make an online enquiry today or call us on +61 2 9419 5322 and let us help you solve your accounting or tax problems.

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