Almost everyone agrees on the point that taxes are complicated to understand. Every year due to the introduction of new reforms or modifications in older, it gets complex. For small business owners, the situation gets much more difficult as sometimes they are only the ones who are managing their accounts. Due to this issue, there are instances that result in overpaying on their taxes by missing out on strategies to reduce taxable liability. No one wants to pay more than the actual amount to the government as it’s hard-earned and something no one wants to get reduced. There is a requirement of reducing taxable income through genuine practices. Below are some proven methods which have an answer for every business individual who seeks information regarding how to minimise tax for small business.
Writing Off Bad Debts
Writing off your bad debts can reduce your taxable amount if you can claim a tax deduction on bad debts by 30 June. For proving that it’s legitimate, it’s better to have it recorded in writing so that it can serve as a claim at the end of the financial year.
Claiming Small Business Tax Offsets
Sole trader or entrepreneur are eligible for claiming a small business tax offset on their tax return which can reduce the taxable amount. While the entrepreneurs will lodge their tax return Perth, the ATO department will ascertain your offset dependent on the data you give.
Deducting Travel Expenses
It is imperative to understand for business owners that their business travelling is deductible, whereas personal travelling is not. The entrepreneurs can take a smart step by adjoining personal travel with some small business purpose. Through this practice, they can save a significant amount on their taxes.
Hiring A Family Member
Hiring a family member in your firm can be said as the best step towards reducing taxes to a large extent. Through recruiting your family members, small business owners can pay a lower marginal rate or completely diminish taxes on the amount paid to their family members.
Utilizing Tax-free Ways To Extract Income
Pay, rewards and dissemination of a lot of business benefits are available. There are several ways through which you can extract your amount without disturbing the cycle of tax. It’s better to take the assistance of a tax expert for knowing the tax-free ways.
Considering Abandoning Your Property
If your property is not providing any value to the business, it’s better to abandon it rather than selling it at a nominal price. By this step, a business firm can take an ordinary loss on the property on its name, which can get deducted.
Changing The Business Structure
Being a small business person, there are no chances that an employee will pay taxes for you. If your business is taxed on the name of Limited Liability Company (LLC), you are liable to pay taxes. For eliminating tax responsibility, changing the business structure, which let you pay a respective salary can be a wise step.
Having Business Vehicle Logbook
Maintaining a logbook of the commercial car or any vehicle used a minimum of 12 weeks an entire year can emerge as a medium in a tax deduction. As per law, commercial vehicle use is tax-deductible, therefore, it is advisable to have all the required receipts and bills like petrol and diesel or maintenance expenses.
The Bottom Line
The steps are curated by expert accountant Perth who have provided their best set of knowledge in eliminating the taxable amount. All these steps are legitimate, and there will be no breaching of accounting laws. We understand the value of money and what matters for small business owners. For all those people who are looking forward to how to reduce company tax in Australia, the best bet will be taking the assistance of our accounting experts who understand the working process of the regulatory board.
