Tax time does not have to be the terrible experience that many business owners come to dread at the end of the financial year, especially when filing for tax returns. By making a few changes to the way you approach tax time, you can make it easy and stress-free. Here are some common mistakes to avoid.
Don’t wait till to separate your expenses for tax returns
If you wait until tax time to separate your personal and business expenses, you will create a time burden that you just can’t afford. Sifting through a year’s worth of receipts is a nightmare.
These days, you can download software and apps that keep track of and organise your expenses for you. You can even just take snaps of your receipts on your smartphone and organise them yourself throughout the year so you can easily identify what tax returns you can claim for.
Don’t go it alone at tax time
Lodging your own personal income tax is one thing, but doing it for a business is an entirely different matter. If you make any mistakes, such as failing to declare something or submitting the wrong information, your business could face stiff financial penalties.
Accountants are experts at what they do, studying for years to make the grade. You can even claim some of the expenses back as a tax refund.
Contact the Dexterous team TODAY to find out what tax returns you may be entitled to and let us take the stress out of tax time so you can concentrate on growing your business. Call us on 1300 996 928 or send us an email on firstname.lastname@example.org and let us do the hard work for you.
Don’t miss out on deductions
Any expenses related to your business count as deductions. This reduces your assessable income, which in turn affects how much tax you pay. It’s important to include all relevant expenses in your return. You need to be precise and back up your claims with receipts or transaction records or you could be audited and penalised.
Don’t cheat on your tax returns claims
Thinking about claiming a deduction on a parking fine or petrol that you used for a personal trip? Think again. If you get audited and are found to have cheated on your business expense claims, you will be fined heavily and possibly worse.
You should also make sure that you are claiming the right amount when you work from an office space at home. It is easy to blur the lines on what is a home expense and what is an office expense.
Get advice from a tax expert to maximise the tax returns you can claim back on rent, mortgage, and utilities. A tax expert will also guide you about what you cannot claim.
Don’t forget to declare foreign income
If you have overseas clients or customers, you will have to pay tax on any income that you have made from them. If it’s earned here, it is taxed here. Equally, if you have worked outside of Australia for any time during the past financial year, you will need expert tax advice to see what you are liable for.
Don’t claim full GST on mixed-use items
If you have purchased an item which is used solely for business purposes, you can claim the total amount of GST you paid on it. But if the item is also used for personal reasons, then you can only claim half part of it back.
If you purchased a car, for example, and its use is split evenly between your business and your own time, then you can only claim 50% of it back.
You can read more about the dos and don’ts of GST on the ATO website here.
Not keeping a log book for tax returns
If you drive more than 5,000km through the financial year for work purposes, you need to keep a log book. You must take odometer readings at the start and completion of each journey. You can read a dedicated post about odometers here.
Prepare for next year’s tax returns
Okay, so you’ve survived tax time again and you are moving into a new financial year. Make sure that next year, you do not make the same mistakes that you have made in the past.
Become super organised, invest in cloud software to help you through the year and if you are not sure about anything, seek the help of a professional.
Contact the Dexterous team TODAY to find out what concessions you may be entitled to and let us take the stress out of tax time so you can concentrate on growing your business. Call us on 1300 996 928 or send us an email on email@example.com and let us do the hard work for you.