As the clock ticks down to tax time, many Australians are feeling the pressure of the looming income tax. With so much to consider and a mountain of forms to fill out, having tax assistance or a tax review will take the stress out of tax time.
The expert team at Active Accounting Group share five smart tips that will help your business save on tax in 2019.
1. Maximize Tax Deductions
A tax deduction is an expense you incur in order to run your business. These expenses must be related to earning your assessable income. Expenses such as your home office, travel, donations to charity, and motor vehicles are commonly missed or not maximized when doing end-of-year tax.
“By keeping evidence such as receipts for claiming these tax deductions on your tax return, you can decrease the total income on which you have to pay tax, which means a lower tax bill for you,” advise Newcastle’s leading accountants.
2. Bring Forward Expenses
When it comes to taxes, timing can be everything. If you are already planning to make a big purchase, timing those purchases just right can make a huge difference to your income tax return. Making expensive purchases before the end of the current financial year may help reduce your overall income and move you down into a lower tax bracket.
3. Purchasing Needed Equipment
Small businesses should keep in mind the $20,000 deduction for asset purchases. Australian tax law states that if you buy an asset and it costs less than $20,000, you can write off the business portion in your tax return for the relevant income year. This threshold is effective until 30th June 2019 and will be lowered to only $1,000 from 1st July 2019.
4. Tracking Your Expenditure
Another effective way of reducing tax is by constantly tracking your expenditure using accounting software such as Xero or MYOB so you can record, organise and manage your business expenses. Most credit cards will also send you a year in review and all your bank transactions are available online so you can double check any business-related expenses you may be able to claim. While online banking has made life much easier, it is still possible for some things to slip through the cracks. Bookkeeping software like Quickbooks or Quicken can give you one more opportunity to catch all deductible expenses.
Correct structuring of your business can save you thousands of dollars in tax. Making the choice between sole trader, partnership, trust or company is a complex decision that can have very different outcomes from both annual tax and future sale of business perspective.
There has never been a better time to sort your tax planning with a free tax review from Newcastle’s leading accountants, Active Accounting Group. Get your free tax review today for a financially secure future for your business.