One of the most essential things for a business owner is to file their tax returns at the end of the year. This tax return depends mainly on the size of the business and its income. Despite this being one of the most common practices, business owners, especially new ones, need help filing their tax returns appropriately. This is why we have compiled a complete guide to filing business tax returns.
When you file your taxes, your business structure must first be considered. Your taxes will be different depending on the type of business you own. You also have to review your business activity statements after gathering all the business records. Next, you should claim as many tax deductions as possible and file the tax returns within the deadline.
Let’s take a detailed look at the steps you need to follow to avoid business tax mistakes:
How to lodge a business tax return
If you own a business, filing your business tax returns becomes one of the most important aspects of your business operation. Regularly filing your taxes is very important, as it saves you from various penalties by keeping in line with the tax regulations. Apart from these, filing your tax returns helps you with accurate and transparent financial records and gives you an idea about the financial health of your business.
But many business owners, especially the owners of small businesses, have difficulties filing their small business tax returns properly, which causes them difficulties and lands them in legal hot water. While filing your business tax returns in Australia, you should follow the following steps.
Obtaining an ABN
Before you proceed to file your tax return for business, you must check if you have an Australian Business Number (ABN). Every company that files its taxes must have an ABN. If you don’t have an ABN, you should visit the Australian Business Register (ABR) website and register for it.
Considering your business structure
This is one of the most important parts of filing tax returns for businesses. The type and amount of tax you have to pay will depend on your business structure. If you are a sole trader, your tax requirements will differ from those of a partnership or a corporation.
Keeping and gathering accurate business records
The next step you have to take to lodge business tax returns is to keep and gather all of your business’s records. The accuracy of these records is very important as these are vital to filing taxes, and any discrepancy will end up with you being penalized. These business records include bank statements, statements of profit and loss, balance sheets, etc.
Determining taxable income
Not all of your business incomes are taxable. You need to go through the law and claim the deductibles. Subtract the tax deductions from your business’s accessible income, which will be your taxable income. You can claim business tax return deductions for business expenses such as wages and rent you pay, bills for various utilities, and depreciation.
Choosing filling out the right form
Different types of businesses have different types of business tax return forms. For example, sole traders will have to fill out Individual tax return forms, while companies have to file company tax forms. You can either fill out a business tax return online or print it out.
Once you have chosen and printed the right form out, you need to fill it up with accurate information. All the relevant information has to be put accurately in the form. While you can do this part yourself, you should get small business legal advice from a tax professional or use tax accounting software to complete this task easily and without any mistakes.
Lodging tax returns
Once you have filled out your forms, you need to lodge your tax returns with the Australian Taxation Office (ATO). There are a few ways you can lodge your tax returns. You can use the ATO’s business tax portal to lodge it online, mail a paper copy of the form to the ATO, or do it with the help of a registered tax agent.
Being aware of the deadlines
While filing tax returns, you must do so within the business tax return due date. Every type of form will have a different deadline, so you must know the deadline for your tax category. If you miss your deadline, you will be penalized.
Retaining the business tax documents
Once you are done with lodging your tax returns, don’t throw the records away. This business tax information will come in handy during audits and also substantiate your tax returns. They will also help you in the case of any legal issues. Keep the records of your tax returns for up to 4 years.
Since filing business tax returns is tricky, we urge you to get professional help in this case. We provide tax return services for all kinds of businesses, so no matter what the size of your business is, you can buy an appropriate tax return package for your business.
Can I do my own company tax return in Australia?
Yes, you can lodge your own tax returns if the taxes are not too complicated. If that isn’t the case, you should get small business tax advice from a tax professional to lodge your tax returns in Australia.
What can small business claim on tax in Australia?
If you are a small business in Australia, you can claim the following business expenses on your small business tax returns:
- Marketing costs
- Finance costs, etc.
Can a foreign company be an Australian tax resident?
A foreign company will be considered a tax resident in Australia if it has its central management in Australia or its voting power is controlled by Australian resident shareholders.
Contact our office: (03) 6153 0180 to discuss your scenario.