Tax Return Essentials for New Business Owners in Sydney

For many entrepreneurs, starting a new business is an exciting journey. From planning a business plan to acquiring investment and delivering your desired services and products – it’s a responsible venture yet an immensely satisfying one.

Navigating through business operations becomes your daily routine to meet your annual goals so that you can improve your services and products.

One of the annual operations you must take responsibility for is paying taxes. It can be daunting, especially if you are filing income tax for the first time. Maintaining accounts, filing taxes and knowing how much you get back from tax returns are some essential operations you must handle when running a successful business.

Today, we will help you understand the essential tax return considerations that you should know when you are a beginner in the business world.

Learn How Your Business is Structured

When you have to pay the tax, you have to understand how your business is structured. It will significantly affect the way you file the taxes. Typically, there are three types of business structures – sole ownership, partnership and corporation.

In the first one, you can easily set up and file the taxes. And you can easily get the forms and files essential for filing personal tax returns. In the other one, you have to require special forms so that you and your partner can file the taxes. In the last one, there are different types of forms available depending on the type of business you run.

Understanding in what category you fall will let you comply with the correct tax forms and regulations.

All the Records Should be Accurate

To ensure a smooth tax preparation, all the records related to your business should be accurate. You have to track income from all the sources and document each business-related expense including their receipt for deductions.

Also, don’t forget to keep a list of assets and any associated depreciation while you are filing the taxes. If you want, you can also an accounting software that will simplify the process and ensure that you are prepared for the tax filing.

Always Be Aware of the Deductions

As a business owner, you have the benefit of deducting all the legitimate business expenses from the taxes. These deductions include home office expenses, vehicle expenses, supplies and equipment needed for your business and marketing costs. All these expenses are deducted during the tax filing. The thumb rule is to include any expense that you spend on your business, from travel expenses to customer engagement costs. You can also research potential deductions to maximise tax savings.

Pay the Estimated Tax Amount

As a business owner, you have to pay the taxes by yourself. If you compare to a job holder, the tax amount is deducted automatically from the monthly income, therefore, traditional employees do not have fear of delaying the tax amount.

However, as you own a business, you should manually do it by yourself for every quarter.

You have to pay the estimated tax amount without fail to avoid penalties. For this, you can mark your calendar so that you can remember the payment deadlines without any delay.

Understand Taxes for Self-employers

Whether you are a sole proprietor or working in a partnership business, you have to understand the self-employment taxes. It will cover the primary things like Social Security and Medicare. You also have to understand that they come in addition to your regular income taxes. It’s essential that you have to budget for these taxes since they can impact the overall tax liability. This problem arises when you are self-employed which is the whole concept of running your own business.

Consult a Professional for Better Guidance

One of the effective tips that prepare you for tax time in Australia is to hire a professional to file your taxes. It’s especially useful if you are running a business jointly. It will help clear off any misunderstandings that may arise between you and your partner.

Also, tax laws change with time and often get complex. A professional will help to save your time, money and effort by expertly navigating through your expenses and deductions, and help you to comply with rules and develop strategies to get maximum returns. Though it’s an investment to hire an agent, it can pay off significantly in the long run.

Stay Up-to-date with the Tax Regime Changes

It’s important to stay updated with the tax changes. You have to subscribe to newsletters; join local business associations follow the latest updates that happen and understand how they may affect your business operations. If you cannot perceive all the updates and how to apply them to your business, then the best thing is to hire a professional.

Final Thoughts

As a new business owner, it can be overwhelming to navigate through the tax laws and get maximum returns. In this case, you can seek help from a professional and reliable tax agent in Baulkham so that you confidently navigate through your tax responsibilities. The timely filing and getting maximum returns will help you stay compliant and you can make your business grow successfully.