We asked a tax expert what advice he’s giving businesses as we head into another tax season.
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Tax time is almost upon us and small businesses are gearing up for a particularly confusing few weeks. Well, some of them are anyway.
In reality, tax time doesn’t have to be the stressful nightmare that it’s sometimes made out to be. With a few simple but meaningful changes, small business owners can create a more streamlined process that won’t have them pulling their hair out.
So what are they? Let’s take a look at some expert tips.
1. Get in early
Don’t wait until the day before you can file to come up with a tax plan. Collaborate with an accountant or tax expert early for the best outcome.
“Talk to your accountant in late May to plan for 30 June 2022 and jointly decide on the tax minimisation strategy most appropriate for your unique situation,” said Ross Haywood, director of Moneytax Financial Center.
When talking to your accountant, you should also be sure to give them the fullest picture possible – which may mean including personal context alongside professional insight.
“Be prepared and have data on projected financial performance for this year and the following,” he told Finder. “Inform them of any upcoming significant events such as inheritances, investment opportunities, retirement, marriage and divorce.”
You never know, there may be tax implications you’re unaware of but your accountant will be.
2. Review your operating structure
This is also a good opportunity to revisit your current operating structure to see if it’s still the most suitable for your business.
“Review your operating structure with your advisor to ensure you have the most appropriate structure for you – whether that’s as a Sole Trader, Partnership, Company or Trust,” said Haywood. “Planning now can have significant benefits in the future.”
Since different business structures are taxed in different ways, they also experience varying obligations, incentives, and advantages. Your tax advisor may be able to guide you towards the most accurate and most beneficial structure for your situation.
3. Invest in financial management software
Switching your bookkeeping system can seem daunting, particularly if you’re not a digital native. But even though it might take some getting used to at first, financial management software can improve and streamline your processes.
“If you don’t have financial management software such as Xero, MYOB or Reckon, now is the time to set one up to prepare for the new year,” said Haywood. “Monthly scorekeeping is vital for business growth.”
In many cases, you can even link your bank account or business credit card account directly to these platforms to consolidate financial statements and create detailed reports.
For example, American Express Business Cards can be integrated with MYOB, Quicken and Microsoft Excel, so you can set up an automatic feed and simplify your business’ reconciliation and reporting.
Plus, it doesn’t have to be expensive. Most of these programs have packages at different price points to help make them more affordable, no matter how small or large your business is.
4. Help offset tax expenses
Most businesses know they can claim the cost of business-related tax advice on their return, but there are even more ways to offset the cost of a tax bill.
Some credit or charge cards will let members earn points on government spending. For example, the American Express Business Explorer Credit Card lets card members earn 1 point for every $1 they spend with government organisations, including the ATO.
Use the card to pay your tax bill and you can collect points which can be redeemed for a variety of different goods or services, including flights, tech gadgets, and even gift cards.
These rewards can be used to help offset business expenses, reward employees, or as client gifts. (Or, you can use them yourself if you like! You deserve it!)
5. Take notice of business-friendly incentives
As it’s an election year, businesses should pay particular attention to the newly announced budget as well as any business-friendly measures. There may be some important changes.
Haywood encouraged business owners to pay particular attention to the instant tax write-off scheme which was extended to June 2023.
“Consider investing into business assets and equipment in order to access the instant tax write-off for the business portion of eligible assets – these can be new or second-hand, and include motor vehicles such as cars, vans or tractors,” he said .
Haywood also encouraged business owners to maximise the tax-deductible super they put into their super account. The maximum is now $27,500.
“Find out any unused prior-year contributions that can be utilised,” he added.
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