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Let’s Talk: Understanding small business tax requirements

As a small business owner, it’s crucial to understand the different types of taxes that apply to your business.

The most common types of taxes that small businesses are responsible for include income tax, self-employment tax, sales tax, and employment taxes. Each tax type has its own rules and regulations, so it’s important to do your research and understand the specific requirements for your business.

Today’s feature of Let’s Talk offers valuable expert insights on how small businesses can plan ahead for tax season, taking into account the different types of taxes that they may be responsible for.

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Nathan Reichstein, Chairman of the Business Advisory Committee, Moore Australia

Nathan Reichstein
Nathan Reichstein, Chairman of the Business Advisory Committee, Moore Australia

“For small businesses to stay on top of their tax, here are some simple things to consider:

  • Understand your tax registrations and the deadlines for filing and payment of your tax returns and business activity statements (BAS). The Australian Taxation Office (ATO) has been ramping up their debt collection activities over the last six months and even if you fall behind, it’s important to maintain open communication with the ATO and enter into payment plans as and when necessary.
  • With the Federal Budget just around the corner, keep an eye out on what changes the government will be making that may have an impact on your business. A few concessions (e.g., full write-off of depreciating assets which the Government introduced during COVID-19) are now about to end and factor these sorts of things into your year-end planning.
  • The ATO routinely release alerts through their small business newsroom. This is a great service where small businesses can get information (email alerts, webinars etc.) directly from the ATO in relation to issues that directly impact them.
  • There is no substitute to experience and, in the lead up to year end, it would be prudent to speak to a tax and business advisor in relation to all the changes that may materially impact your business and help you take advantage of any concessions in place.”

Nicole Kelly, Chief of Tax Confidence and Founder of TaxTank

Nicole Kelly
Nicole Kelly, Chief of Tax Confidence and Founder of TaxTank

“For sole traders, entrepreneurs, property owners, and taxpayers juggling both a day job and a side hustle, tax time can be daunting. Business apps provide a P&L, however sole traders report earnings in their individual tax return, so what they really need to know is how much tax they will pay taking into consideration all other incomes from wages, properties, trading etc. We need to debunk the myth that there is little that taxpayers can do to control or even gain visibility into their taxes until it’s time to do their quarterly BAS or end of financial year tax returns. One of the most important things people can do is change this mindset.

“The ATO is renowned for their various ‘crackdowns’, including most recently on property owners and people working from home, so it’s important taxpayers not only gain control but also the confidence they’re getting it right and protecting themselves from costly audit adjustments. By leveraging the latest cloud based software purpose built for individuals, taxpayers can gain insights into their tax and financial situations that enable them to make better decisions throughout the year, rather than just trying to survive the annual tax return process. The business sector has had this advantage for years, but now it’s time for individuals, mortgage owners, investors, sole traders and side hustlers to benefit from the same level of control and visibility to both avoid surprises and take the hassle out of tax.”

Rolf Howard, Managing Partner, Owen Hodge Lawyers

Rolf Howard, Managing Partner, Owen Hodge Lawyers

“There are several temporary tax depreciation incentives in place which are designed to simplify the depreciation process for small businesses which could go a long way to minimising the tax you pay this year.

“Eligible small businesses with an aggregated income of less than $10 million from 1 July 2026 and $2 million for previous years, can access temporary full expensing which allows you to immediately deduct an asset in the year it is first used or installed, utilise an instant asset write-off for assets that cost less than the relevant threshold, and leverage a general small business pool which simplifies the depreciation deduction.

“It’s important to talk to your accountant and solicitor to make sure you’re accessing the right incentives while remaining compliant to the relevant tax regulation.”

Steven Nicholson, Co-Founder and CEO, Retinue Accounting

Steven Nicholson
Steven Nicholson, Co-Founder and CEO, Retinue Accounting

“Running a small business is hard enough without having to understand complex tax legislation. These key points will help your business stay compliant and minimise the cost of tax:

  1. Know the deadline dates by which your Business Activity Statements, Fringe Benefits Tax return, and annual company tax return must be submitted. Ensure your cash flow forecasts allow for payments to be made by these dates. Using a tax agent to prepare and file these returns gives you an extra month to lodge and pay.
  2. Fines and interest are incurrent for late submission. File on time, even if you cannot afford to pay, you can then call the ATO and arrange a payment plan. Your accountant may be able to get any late lodgement fines waived by calling the ATO.
  3. Be aware of the limits above which your business must register for certain taxes, such as GST and state payroll taxes.
  4. Keep your receipts for expenses and logbooks for company vehicles to maximise your deductions and minimise your tax expense for the year.

“A good accountant should support your business throughout the year, not just at tax time, allowing you to focus on what is important.”

Andrew Ward, CRO, Banjo Loans

Andrew Ward
Andrew Ward, CRO, Banjo Loans

“For SME owners, understanding your taxation obligations is critical for your success.  Doing so will ensure you pay the appropriate amount of tax, and assist you in achieving your business goals.  There are numerous SME taxes to understand, and accordingly you may need the assistance of an advisor such as an accountant.

“Possessing a good understanding of taxation obligations will assist with:

  • Financiers – who will be interested in the status of your taxation affairs.  They will review whether you are up to date on obligations such as PAYG, Company Tax, GST, and Superannuation Guarantee payments. Being able to articulate your tax situation clearly will maximise your chances of obtaining business finance;
  • Business continuity – being up to date, or having mutually agreed payment arrangements with the ATO will minimise any unexpected issues including ATO enforcement actions;
  • Minimising penalties from the ATO – in respect to late lodgement of returns, including interest charges which can be substantial;
  • Ensuring that your taxation obligations are up to date – to minimise any potential for personal liability as a Director.

“Possessing taxation knowledge and ensuring your affairs are in order will reduce the likelihood of expensive audits, reducing unnecessary costs, and ensuring your time can be spent on more important issues such as business growth.”

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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