As the end of the financial year approaches, your small business may be quickly trying to organise its finances and prepare your tax return. You may also be looking for the best ways to complete the tax return to benefit you and your profits and organise your taxes for the next financial year.
This is all the more relevant in the wake of the COVID-19 pandemic and all of the financial uncertainty that it brought to small businesses that we are still not fully recovered from.
To help, we have compiled a list of tax tips for small business owners in 2022.
1. Organise your accounting file
Before the deadline, you should ensure that all of your accounting files are in order. Gather your bank statements from the entire financial year – these are needed to confirm the overall balance so that your financial statements are accurate. You should take steps to organise this whether you have an accountant or not and don’t assume that if you do have one they will deal with it automatically. Make sure to provide them with the information they will need to produce reports in good time. This means that they are better equipped to ensure you pay the correct amount of tax.
Going into the next financial year, make sure that you keep these details in order for the next tax return season. Starting as early as possible to organise your data means you can more realistically project financial performance as well as benefit from tax implications.
2. Invest in accounting software
The above step is made much easier with accounting or financial management software, if you have not already implemented this. If you have the funds to put aside for this, you could end up saving your small business money in the long term because it makes keeping on top of your finances and spotting tax incentives easier. There are many affordable software options and plans to choose from, such as Xero, so shop around to find out which best suits your business operations.
3. Identify COVID-19 related payments
You may have received COVID-19 related support from the government during the 2021/2022 financial year, so it is vital that you ensure the details about this are compiled and that you have read the tax implications of these. These could be federal, state, territory or local government assistance packages. This ensures you are not caught out by unexpected bills from the assistance later.
4. List your assets
To stay properly organised and prepared for the next financial year, make a list of all of the equipment or vehicles you have purchased in the last 12 months including invoices. Then, apply the appropriate deprecation rules to them. If you have taken out loans to pay for these assets, you will need to calculate the interest paid on these loans. This is extremely beneficial as it means you can claim these in your tax return.
5. Pay attention to incoming changes
Because 2022 is an election year, there could be some welcomed changes incoming that could benefit your small business in the newly announced government budget. For example, the instant tax write-off scheme has been extended to June 2023 meaning you can take advantage of more tax benefits on your assets as mentioned above. Keep an eye out for new small business grants coming into play.
Trust Total Business Partners today
If you require financial or structural assistance with your business, look no further than Total Business Partners. We offer a reputable range of services, including objective business advice, short and long-term financial planning, and property development solutions among much more. We can help you to value your Australian business and devise a practical plan to increase this value.