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BUSINESS ADVICE •  12 JULY 2023 • 6 MIN READ

Kickstart your financial year with these 7 tax tips

2 business owners starting the financial year off right

The start of the financial year is an exciting time. It can be a great opportunity to refresh, regroup and focus on your goals as a business owner. We've put together a list of seven tax tips to help you start the year on the right foot and set yourself up for success in the year to come.

1. Open a business bank account

If you’re a sole trader you don’t necessarily need a separate business bank account (though we do recommend that you have one!). However, if you’re operating your business through other structures (such as a company, trust, or partnership), these are separate legal entities so will need to each have a bank account of their own.

For example, if you’re changing your business structure from a sole trader to a company in the new financial year - or if you’re starting a business via company, partnership, or trust structure - you need to open a business bank account. To learn more, check out our article on opening a business bank account.

2. Know your tax obligations

Your tax obligations are one of the most important things to stay aware of as a business owner. These can differ depending on your situation.

For companies

If you operate your business through a company structure, you’re responsible for:

  • Registering your company: if you want to start a new company or transition from a sole trader to a company you must register the company with the Australian Securities and Investment Commission - to do this you'll need to lodge a registration form and pay a registration fee. Your company must also have a Tax File Number (TFN) and Australian Business Number(ABN) which can be set up through the Australian Business Register, or by contacting an accountant (we can help with this!).
  • GST: Australian companies with an annual turnover above $75,000 are required to register for GST and then charge GST on their sales. You're also required to lodge GST returns (part of your Business Activity Statement) on a regular basis if you’re GST-registered. The filing frequency can be monthly, quarterly or annually (if your turnover is less than $75,000 and you are voluntarily registered).
  • Lodging income tax returns: Companies are required to lodge income tax returns annually. If you file your own income tax returns the deadline each year is the 31st of October. However, if you're working with an accountant, this deadline may be extended to the 15th of May the following year.  Our ultimate fact sheet on Australian tax returns explains this in more detail.
  • Paying taxes on time: Be sure to file your company’s tax return and pay your company’s taxes on time to avoid late lodgement penalties and interest.

For sole traders

If you operate your business as a sole trader, you’re responsible for:

  • Lodging and paying income tax: As a sole trader you're responsible for lodging and paying income tax on your earnings. The tax rate depends on your total income for the year, and personal income tax rates apply. 
  • GST: If your annual turnover is more than the $75,000 threshold you're required to register for GST and charge GST on your goods and services. You also need to lodge GST returns regularly. 
  • Superannuation: Sole traders are not required to make superannuation contributions. However, you can still make tax-deductible contributions to your super fund.
  • Declaring other income: You’re required to declare any other income you receive in your tax return - such as rental income, dividends or interest.

If you’re not sure which business structure to choose, we have an article talking about common business structures in Australia. The start of the financial year is a good time to review your position and ask your accountant whether you should switch to another business structure. 

3. Plan ahead 

Review business structures

The business structure you set yourself up with will have a huge impact on how your business runs, and will likely be one of the first steps you take when starting out. Keep in mind you may benefit from other structure types as you scale up your business. The 3 main things to consider when setting up your business are:

  • Asset protection
  • Tax minimisation
  • Succession planning

Your business structure can change along with your needs as a business owner. You can always discuss with your accountant if your business structure is optimal for your current situation.

Review GST position

You must register for GST if your turnover is (or is expected to be) over $75,000 within 12 months. You must register for GST as soon as you think you’ll earn more than $75,000 in twelve months. Review your GST position in the new financial year to see if you need to register for GST. If you earn less than $75,000 you can voluntarily register for GST.

Claim business expenses

A key component of planning ahead is knowing what you can claim for tax. As a rule of thumb, you can claim only on an expense which is directly tied to generating income for your business. These may include:

Setting money aside

To avoid problems with your cash flow you need to set money aside for taxes (such as GST and income tax). As there are so many variables to consider, it’s very difficult to provide a set percentage of the money you should save. It’s best to assess the situation with your accountant based on your marginal tax rates.

4. Know your key dates

Be sure to mark the following dates in your calendar:

  • 30th of June: End of the Australian tax year
  • 31st of October: Deadline for lodging and income tax returns (if filing on your own).
  • 15th of May: Deadline for lodging income tax returns for those who use a tax agent.

Our key tax deadline calendar will help you stay on top of these dates (and avoid any late filing penalties or interest!).

5. Keep all your records

One of the most important (and often overlooked) tax tips we can give is to keep your records. The ATO requires you to retain your accounting records (such as invoices, receipts and bank statements) for at least 5 years in the event of an audit.

You can either store your records in a physical location or in a cloud-based software such as Google Drive or Xero. Make sure they are easily accessible and understandable in the event of audits or tax inspections.

Maintaining good record-keeping practices can help you avoid costly mistakes or fines.  You’ll also have a clearer understanding of your business's financial performance, helping you plan ahead.

6. Invest in software

Accounting software can be a game-changer for small businesses. It allows you to automate time-consuming and complex financial tasks, such as managing invoices to generating financial statements and tax reports. Cloud-based software allows you to work on your finances from anywhere, and collaborate with others in real time.

Investing in software helps to save money (and time) in the long run, as efficient management of your financial data means you’ll improve the accuracy of your information and have more insight into how you’re tracking. 

Our pick of the bunch is Xero - learn more about how Xero enriches your business here.

Kate, Australian problem solver

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7. Hire a professional 

Let’s face it - lodging tax returns probably isn’t the reason you became a business owner. Hiring a finance professional can save you a lot of time and stress, freeing up your schedule to focus on your business or charge billable hours.

However, a good accountant can help with far more than helping you manage your taxes. At Beany, we’re not just there for you at the end of the tax year. Your dedicated accountant will work alongside you throughout the financial year providing you with all the services and support you need.

If you have happened to miss the deadline for lodging your tax return, your accountant will be in touch to remind you to do so. They will be able to help with setting up a plan to get things sorted.

Put these tax tips to good use with Beany

Start your financial year in confidence with Beany. We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down barriers and get things done. Looking out for you is what we are all about - talk to one of our team members or get started for free today!

Julian Hutabarat

Julian Hutabarat

General Manager, Beany Australia

I started my accounting career in 2012 and obtained my CPA in 2015. Outside of work I enjoy mountain biking and hope one day to ride Crank It Up! at Whistler.

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