Filing your end of financial year tax is often complex and confusing. That’s probably why almost a third of Australian small businesses don’t feel confident that they understand how tax and superannuation works, according to the Australian Bureau of Statistics.
Make sure you avoid these common SME tax mistakes:
Not claiming deductions
Tax deductions can be tricky, but if you know the deductions available and claim them correctly you can reduce your taxable income considerably, saving you money. Here’s a quick list of the deductions small businesses often forget to claim so that you don’t make the same mistakes:
- Donations to charitable organisations.
- Employee travel allowances for overseas and domestic travel.
- Depreciation on company vehicles.
- Employee clothing and uniforms.
If you’re unsure about what you can and can’t claim, speak to a tax accountant to make sure you get it right.
Poor or messy bookkeeping
If you do all the bookkeeping for your company, it’s essential that you know what you’re doing. Likewise, when you hire a bookkeeper it’s extremely important that they’re qualified and experienced.
That’s because poor bookkeeping can lead to missed deductions, incorrect returning of your income and increased accountant fees (due to incorrect, incomplete or messy information).
If you’re doing your own bookkeeping it could be worth requesting training from your accounting software provider, or a professional bookkeeper to make sure you know what you’re doing. If you’re hiring someone to help, take great care to make sure they’re experienced enough to do the job properly.
If you’re bookkeeping is up to scratch filing your tax return and paying the ATO through your online business banking portal should be straightforward.
Not paying superannuation
Most of us understand our obligations to our employees, but small businesses are often confused when it comes to contractors. If you’re paying a contractor over $450 a month you may be obligated to contribute to their superannuation.
The rules around this can be a little complex, so it’s worth seeking professional advice if you’re unsure.
If you’re confused about anything at tax time and need help paying on time, drop in to your local BOQ branch and speak to one of our small business advisors.