Small Business Tax Times: Top Five Mistakes & Surprising Things You Can Claim
A major tax accounting firm has revealed the top mistakes SMEs make at tax time, while a quantity surveyor has revealed the surprising things you can claim.
According to H&R Block, 60% of small businesses (SMEs) in Australia go out of business within the first three years.
Mark Chapman, Director of Tax Communications at H&R Block, shared five common mistakes that contribute to this high failure rate:
1. Don’t follow the cash flow.
“Don’t bury your head in the sand. Keep your books and records up to date.”
2. Put off the bookkeeping because there is always more to do.
“Don’t neglect your bookkeeping. Not only will you struggle to complete your Business Activity Statements (BAS), but you will also not understand the profitability and cash position of your business.
“Remember to keep all your books and records for five years! Keeping good records helps you stay in control of your business. “
3. Not engaging with your tax agent or BAS or – worse yet – not engaging with the ATO.
“While a lack of cash is indeed the number one killer in business, there are some simple ways out. The first is to understand your tax obligations, and I recommend bringing in a professional to do it. “
4. Don’t realize that your business has to register for the GST.
“There is a plethora of services available to ensure that SMEs, start-ups and independent traders are financially secure, continue to develop and achieve the best possible results, not only at tax time, but throughout the day. ‘year.”
5. Not getting professional help with your Business Activity Statements (BAS).
“Use a tax agent or BAS agent to supplement your BAS. Not only will they make the process of hosting a BAS easier, but you will also have more time to house yourself.”
“Now more than ever, small businesses need trusted partners in the form of strong tax advisers.”
Surprising articles that SMEs can claim
Another strategy to combat financial pressure at tax time is to claim tax depreciation on income-producing assets.
BMT consultancy CEO Bradley Beer said many existing assets owned by a company can be written off, and there could be thousands of dollars in unexpected tax deductions held in surprising articles.
“Typically, if an asset is used to generate income, it can be depreciated. And in over twenty years of operation, the BMT team has seen it all,” Beer said.
Mr Beer said BMT has looked at all depreciable business assets its site inspectors have seen and noted some of the more specific – and obscure – items identified.
Ripening bags of bananas have been listed as specific and little-known assets that give rise to important deductions for banana plantation business owners, while one of the more important, but obscure, deductions that BMT found was a ride in a theme park.
“A banana farm can claim a surprising amount of depreciation on its bags of ripening bananas. The average deduction for the first full year is $ 16,000 and the cumulative deduction over five years is $ 37,333,” Mr Beer said.
“A pirate ship theme park ride produces an average deduction of $ 119,987 for the first full year, while its cumulative five-year average deduction is $ 535,940.”
Image by Kelly Sikkema via Unsplash