Free Tax Advice for Small Business

If you own a small business and are seeking for free tax help, you've come to the right place. In that case, you have found the proper destination. This article will present you with some advice that will assist you in filing your taxes in the most accurate manner. We will also go through some of the more typical tax blunders that proprietors of small businesses tend to make. So, without further ado, let's get the ball rolling here, shall we?

You, as the owner of a small business, are probably always looking for methods to save money, aren't you? You can accomplish this goal in a number of ways, one of which is to make use of free tax guidance services. As a result of the fact that many organisations provide these services free of charge, this is an excellent method for lowering the amount of money you owe in taxes. This article will provide you with additional information regarding free tax counselling services as well as instructions on how to make use of them.

If you own a small business and are seeking for free tax help, you've come to the right place. In that case, you have found the proper destination. This article will present you with some advice that will assist you in filing your taxes in the most accurate manner. However, bear in mind that the material below is only designed to act as a guideline, so keep that in mind while you read it. Always seek the counsel of a tax expert so that you can receive precise recommendations that are suited to your own circumstances.

A Guide to the Australian Tax System for Small Businesses

It is not difficult to comprehend the rationale behind the assertion that the sector of small businesses represents the "engine room" of the economy and the "largest employer in the country." A recent study that was carried out by the Council of Small Business Organisations of Australia (COSBOA) revealed that small firms were responsible for the creation of 5.1 million jobs, which is approximately half of all employment in the private sector. There are over three million small enterprises in Australia, including main production concerns, according to the Australian Tax Office (ATO), which accounts for around 96% of all firms.

What Exactly Constitutes A Small Business?

With the exception of the small business CGT exemptions, where the threshold is just $2 million, a small business is typically thought of from a tax viewpoint as one with an annual turnover of less than $10 million.

The law mandates that turnover must be calculated from the "aggregated" amounts, which essentially means annual turnover (gross income, excluding GST) of every "connected" or "affiliated" business. This is done to prevent businesses from splitting activities so they can fall under the $10 million threshold and access various tax concessions.

Small Business And Tax

The government shows that it recognises the significance of the small business sector by providing tax breaks for a variety of expenses that small businesses typically incur.

Temporary Full Expensing

The government has enacted a significant package of reliefs for businesses in order to encourage enterprises to invest tax effectively in new capital assets. This is being done in an effort to give businesses a boost out of the blues that would be caused by COVID in the year 2020.

The tax break, which is known as "temporary full expensing" (or TFE for short), enables businesses to deduct the full cost of eligible capital assets from their profit for the year rather than depreciating the cost over the course of several years. This is in contrast to the traditional method of depreciating the cost over the course of several years. The new regulation will go into effect on October 6th, 2020.

The new measures could (with some very substantial limitations) represent a significant potential to enhance your business this year, particularly for smaller enterprises. However, these opportunities come with certain restrictions.

The whole purchase price of any and all capital acquisitions can now be promptly deducted by businesses. This includes the following types of purchases:

• Fixtures and fittings, such as the interior design of a café or shop
• Technology, including mobile devices, desktops, point-of-sale terminals, and surveillance and alarm systems
• Plant, machinery, and equipment
• Office equipment
• Motor vehicles such as utes, delivery vans, and the majority of cars (with the exception of cars costing more than $59,136) are included in this category
• Motorbikes
• Solar systems

To qualify, a company's yearly revenue must total less than $5 billion, and the company as a whole must meet this requirement. When discussing "aggregated" turnover, it is important to note that it is necessary to include the turnover of any and all parent companies, even those based overseas.

In addition, companies that have a total turnover of more than $5 billion but a total income in Australia of less than $5 billion are also eligible for the tax reduction, provided that they had previously spent more than $100 million in the fiscal years 2016–17 through 2018–19. This indicates that large multinational corporations, the likes of which typically have a global turnover of more than $5 billion, still have a chance to benefit.

Because the requirement for annual turnover is so high, virtually all companies operating in Australia are eligible to participate in the programme.

TFE applies to newly purchased depreciable assets as well as the costs of making changes to previously qualified assets (even if the existing assets were acquired before the scheme started).

In the case of small and medium-sized firms (those with an aggregated annual turnover of less than $50 million), small and medium-sized businesses are also eligible for full depreciation of second-hand assets. Businesses with an annual turnover of $50 million or more are not permitted to include second-hand assets in their valuations.

The following are the primary types of assets that do not qualify for the complete write-off of their costs:

• "Expensive" automobiles are those with a price tag that is greater than $59,136
• Structures and other assets that are qualified for deductions under the capital works category
• Assets located in other countries
• Some major production assets (such fence and water infrastructure, for example) already have an instant write-off programme in place, and this programme is still in effect
• A company's resources that aren't being put to good use.

The cost of so-called luxury automobiles can be depreciated up to a limit of $59,136 (excluding GST), but anything that costs more than that cannot be depreciated at all. This rule, which has been in effect for a considerable length of time in relation to the depreciation of cars, has been transferred to TFE. The purpose of the law, in a nutshell, is to stop companies from using the money they get from taxpayers to buy flashy luxury vehicles.

The limit on pricey cars does not apply to motorcycles or other motor vehicles that aren't considered cars for the purposes of taxation. Because of this, commercial vehicles like vans, buses, and trucks can have their entire cost completely written off, regardless of how much they cost. The fact that some of the larger utility vehicles are also considered to be business vehicles rather than cars is a very important consideration (for example, for tradespeople).

Consider for a moment that the utility vehicle has a load capacity of more than one tonne (the dealer or manufacturer should be able to confirm this). In that scenario, we do not count that towards the car limit because we do not consider it to be a car. This is a potential opportunity to buy the vehicle and write off the entire cost, as some of the larger and more expensive utes actually cost more than $59,136.

Take note that the final exclusion excludes TFE claims for capital assets utilised in a non-business capacity, such as assets purchased by investment property owners or assets used in your job. This applies to both of these situations.

If you utilise the asset for both business and personal reasons, you are required to proportionately reduce any TFE deductions you claim. For instance, if you buy a new computer for $2,500 and utilise it equally split between your personal and professional lives, the maximum amount of the purchase that you may deduct from your taxes is $1,250.

Trading Stock

The Tax Act has a set of simplified trading stock regulations, according to which you are permitted to include the same stock value at year's end as you did at the beginning of the year if the value of your trading stock did not change during the course of the tax year by more than $5,000.

Pre-Paid Expenses

When certain pre-paid business expenses are made by a small firm before the end of the fiscal year, the owner may be eligible for an instant tax deduction for the amount. Take, for instance, the scenario in which a payment paid an expense that has been carried over into the new fiscal year (such as insurance premiums, rent or membership of a trade or professional body). In that instance, you are eligible to make a claim for the deduction during the previous fiscal year. Check your payments for the time period before the 30th of June once more to see whether anything qualifies for the discount.

GST

Taking care of your responsibilities with regard to the Goods and Services Tax (GST) can also be made easier thanks to the fact that qualifying firms are only needed to account for GST once they have received payment for it. You also have the option to pay the GST in instalments, and the ATO will figure out the total amount of those payments on your behalf. If a small business decides to use part of the things it purchases for its own personal use, it has the option of claiming the full GST credits and then making a single adjustment at the end of the tax year to account for the percentage of private use.

In addition, small firms can take advantage of pay-as-you-go tax instalments, which allow them to pay their taxes on a quarterly basis in accordance with a formula that is derived from their most recent tax return assessment. You won't need to go through the trouble of performing calculations in "long form" because the income reported has been updated to reflect the most recent rise in gross domestic product. This will save you time.

Write-Offs And Deductions On Your Tax Returns For Your Small Business

Are you getting your company ready for tax season? When you are getting ready to file your tax return, it is important to keep the following potential tax deductions in mind.

Claiming the quick write-off of corporate assets

Because of this regulation, you may be able to deduct the cost of qualified company assets, such as automobiles, machinery, and equipment, in the same year that they were purchased.

If the requirements are met by your company, you may be allowed to deduct expenses related to the purchase of assets on your tax return for the year 2021. This is subject to the condition that they have had their initial use or have been installed and are ready for use within the time periods specified by the ATO.

It is possible that you still have time to make purchases for your company and deduct the qualified amount from the amount of income you made in that tax year. As a result of the complexity of the requirements and the fact that not all acquisitions or expenditures may be eligible for the deduction, you will need to obtain your own personal tax advice before investing in the asset.

Taking Into Consideration The Depreciation Of Business Assets

In most cases, you won't be able to claim tax deductions right away (except in special conditions like the instant asset write-off – see above.) Instead, the cost of the asset is claimed over time, which reflects the fact that its value has decreased over time. Tax depreciation is the term that most people use to refer to this process. The process of depreciation on taxes is complicated, and several laws may apply based on the kind of asset and how it is put to use. In addition, certain entities that fall under the category of small businesses may make the decision to compute their tax depreciation claim in accordance with simplified depreciation regulations.

Please see a tax expert who is appropriately qualified if you require any further information. In addition, information can be found on the website of the ATO.

Prepaid Expenses

It can be expensive to manage your own business, but you may be able to deduct some of the costs associated with doing so from your taxable income. This includes expenses that you pay for in advance.

If you prepay part of your expenses before the 30th of June, you may be able to enhance the amount of your deductions that you are allowed to take for the financial year in which those expenses were paid. Expenses that have a service duration of less than or equal to one year, such as annual policies, utility bills, or professional subscriptions, are examples of expenses that qualify for tax relief. Take into consideration that if you claim them this year, you won't be able to claim them again next year, which could result in an increase in the amount of tax you owe the following year.

Expenses Relating to Bank Accounts and Loans for Businesses

At the time of filing your taxes, you need to give some thought to whether or not you can deduct the fees and interest you pay on business accounts and loans.

Deductions for Individual Retirement Account Contributions

If you are under the age of 751, you may be entitled to deduct personal contributions to superannuation that you have contributed to an approved super fund from your taxable income. Those who are between the ages of 67 and 74 must pass the work test in order to be eligible to contribute. This test requires that the individual be employed for a minimum of 40 hours per week for a period of at least 30 consecutive days during the fiscal year.

Due to the work test exemption, beginning on July 1, 2019, if you are aged 67 to 74 (measured at the time of the contribution), you may be eligible to continue making voluntary contributions for a further 12 months from the end of the fiscal year in which you last met the required work test. This opportunity is available to you if you are between the ages of 67 and 74 at the time the contribution was made. To be eligible to make contributions under the work test exemption, the total balance of your superannuation account must be less than $300,000 shortly before to the financial year in which you will be making the contribution. However, once you have satisfied the requirements of the work test exemption for a certain fiscal year, you will no longer be eligible to do so in subsequent years.

It is imperative that you keep in mind, in order to claim a personal superannuation deduction for the financial year, that the combined total of your superannuation guarantee payments, salary sacrificed amounts, and your personal tax-deductible contributions does not exceed $25,000 in a financial year. If it does, then you will be required to pay additional tax on top of what you already owe.

In order to make a personal contribution that is tax-deductible, you are required to provide your super fund with a valid "Notice of intent to claim or vary a deduction for super personal contributions form" within the prescribed time limits, and you must also receive a written acknowledgement for a valid notice from the fund. If you plan to claim a tax deduction for personal contributions, you should look at the information provided on the ATO website.

Various Deductions

In the event that you have lately been working from home as a result of the coronavirus, you may be eligible to claim tax deductions for expenses that are associated with the generation of your income. Before you can claim a certain amount on your tax return, there are a number of factors you need to take into consideration. For instance, you need to determine whether or not you are eligible to use the "shortcut method" that has been temporarily approved by the ATO (which is 80 cents per hour for all additional running expenses) for the period beginning July 1, 2020 and ending June 30, 2021. It's possible that other ways of calculation are acceptable as well, and perhaps even more so given your circumstances. You need to give some thought to the requirements for claiming a deduction as well as the strategy that would work best for you. The website of the ATO contains more information that can be accessed there.

There are a variety of other costs that you bear in order to maintain your company operational or to assist you in earning cash from the company. These costs might be deducted from your taxes. You can get additional information regarding deductions that you are eligible to claim by visiting the website of the ATO or by interacting with an accountant or tax adviser.

Assistance for Small Businesses

We provide a variety of tools and services to make managing your taxes and superannuation as simple and straightforward as possible for you. We wish to assist you in running and expanding your company, as well as getting back on track if you stray off course. You can also get assistance by talking to a tax or BAS agent who is registered with the government.

Toolkit for Small Business Tax Season

Our tax season toolkit for small businesses includes fact sheets that can assist you with the following:

• expenses incurred by running a home-based business
• transportation costs
• travelling costs
• leveraging resources or funds from your business
• suspending or terminating your business.

Credits for Increasing Cash Flow Are Being Reported

Because they are not considered to be exempt or assessable income, cash flow boost credits are not subject to taxation. Depending on the structure of your company, the ways in which you declare the numbers on your tax returns and financial statements will be different.

Additional Governmental Payments

It is possible that you will be required to include any grants or payments from the federal, state, or territory governments of Australia that you have received as a result of recent natural disasters or COVID-19 in your taxable income. Please refer to:

• Government grants, payments and stimulus during COVID-19
• Government payments to include in your business's assessable income

Single Touch Payroll

Through the use of software that is enabled with Single Touch Payroll (STP), you will be able to send us the payroll information of your employees at each time that you pay them.

The STP kicked off on July 1, 2018, for businesses that have 20 or more employees and will begin on July 1, 2019, for businesses that had 19 or less workers. It is imperative that you begin using STP for reporting immediately if you have not already done so.

An end-of-the-year finalisation declaration needs to be made through STP by employers each and every year. In most cases, you have until the 14th of July of each year to submit this declaration.

If the data is ready, you can complete the finalisation process earlier. When you finalise the information for your employees as soon as possible, it will allow them to file their tax returns much more quickly. In the event that COVID-19 has had an effect on your organisation and you require additional time to finalise your STP, you have until July 31 to do so. It is essential that you finalise the data pertaining to your employees by the 14th of July, if at all possible, and communicate to your employees after you have done so, so that they can file their income tax returns.

Because you are using STP for reporting, you are exempt from the requirement that you provide payment summaries to your employees and that you submit a STP payment summary yearly report to us.

Your staff members can access the information they require in their income statements by using the ATO's online services, which are available through myGov, or by getting in touch with their tax agents.