Taxes aren’t fun. We work hard to build an income for ourselves, and then the government comes along and takes a significant slice of what we’ve earned. Unfortunately, they’re one of few certainties in life, so we simply have to get used to them. Of course, that doesn’t mean that we need to hand over more than is necessary.
Today, we’re going to explore five essential tax tips for small business owners to ensure that you’re getting the most out of tax season.
Call in the Cavalry
Unless you’re one yourself, the first thing you need to do is enlist the assistance of a tax accountant. Just as you’re a professional in your field, so too are they in theirs, and that’s going to be vital in ensuring that your taxes are done correctly.
A single mistake in the realm of small business tax could lead to financial ruin for you and your business, so it is crucial that everything is above board. Plus, your tax accountant should be able to get you a far nicer outcome than you could get yourself as they know all of the ins and outs of deductions.
Have Your Books in Order
Technically, having your books in order is a year-round task. Purchases that may seem insignificant at the time could add up quite nicely on your return, and customer debts that you thought were lost forever could come back in their own way (more on that later).
The thing is, it will be nearly impossible for your tax accountant to get you everything you’re entitled to if your books aren’t in order. You could also miss payments to the tax department or accidentally misreport your profits if you’re not on top of all the comings and goings in your business. This can get you in a lot of trouble if you’re caught.
Don’t Forget to Factor in Your Retirement Fund
Retirement or superannuation funds aren’t mandatory for small business owners, so many people simply overlook them. While you need to go with a financial plan that will keep your business alive today, having a retirement account can help you better prepare for the future and may even save you some money on your taxes. The tax laws vary from country to country, but in many cases, a certain amount of retirement fund contributions are permitted at a concessional tax rate, so it’s worth speaking to an SMSF accountant or other relevant professional to see whether this strategy could work for you.
Be on Top of Depreciation
Another tax tip is to be on top of the depreciation of your business’s assets. Loss of value could equal a tax deduction, so it’s a good idea to ask your tax account what you can and cannot claim at the end of the financial year.
Write Off Any Bad Debts
Finally, if you have clients or customers in arrears, and you’re certain they’re not going to pay up, write off their debts as a tax deduction. This process is fairly complex, and there are quite a few criteria that need to be met for a debt to be considered bad, but with your tax agent by your side, you should be able to recoup at least some of your losses.
These tips should help the tax process for your small business run a lot more smoothly, but remember, they don’t work if you don’t work on them. Keep on top of things, and reach out to a professional if you need help, there’s no shame in calling in an expert. In fact, it could literally save your business.
