Want more money and less stress? A tax accountant can play a big role in helping you have both.

While it’s possible to manage your finances and lodge your tax online, there are some big reasons to hand the responsibility to someone else, especially if you’re a small business owner.

These are some of the benefits our clients experience after working with the experienced tax accountants at Mobbs & Co.

More time

Who has time to bury themselves in receipts, Profit & Loss statements and financial reports when they are running a business?

Time is the most precious asset most small business owners have. Don’t waste yours on finance-related tasks when you could be focused on growing your business.

Less stress

Unless you have an accounting qualification, balancing the books is tricky (it’s still tricky sometimes, even for your tax accountant).

That feeling of knowing you need to go over your accounts but being reluctant to get stuck into it isn’t a pleasant one. Walk away from the stress by handing the bulk of the responsibility to someone who can get it done in far less time than you.

Less confusion

The goalposts of paying tax change every year. One year you can claim for one thing, the next you can’t.

If you don’t have time to stay on top of ever-evolving legislation, you’ll benefit from working with an experienced tax accountant. It’s this professional’s job to know the rules and regulations inside out.

Less dealing with the ATO

The Australian Tax Office isn’t really a place you want to spend a lot of time on the phone with when you’re a business owner.

Let your tax accountant handle your relationship with the ATO by receiving and responding to correspondence on your behalf. They will reach out to you when you do need to get more personally involved.

Longer deadlines

Most Australians are expected to lodge their tax return by October 31 but if you have a good tax accountant they should be able to get extra time.

Having an extension until as late as May gives you more time to be prepared. Your accountant can give you a heads up as to what your bill will be so you can make sure the money is set aside and you don’t end up paying interest on an overdue tax bill.

Additional support

A large tax franchise may be able to support your basic tax needs but it makes sense to work with a boutique accountant who is focused on small businesses.

As well as dealing with your tax obligations, this professional can provide tips and ideas that will help you grow your business.

More money

This is the big one! Having an experienced, reliable and dedicated accountant will definitely help you pay less tax so you can keep more of the money you earn in your pocket or use it to grow your business.

For a small (tax-deductible) cost, your accountant has the potential to save you a significant amount of money. As mentioned, they can also identify opportunities for your business to generate more revenue so you have a more profitable and financially secure future.

See more: Five ways to pay less tax

At our accounting firm, we have seen it all. If you’re worried because you haven’t lodged your taxes in a while or because your bookkeeping isn’t up to scratch, you can rest assured we have definitely seen worse!

One of the areas we specialise in is helping small businesses to get back on track when it comes to accounting and tax. Once we have everything up to date, we make it our goal to show SMEs how to avoid the common pitfalls of tax time.

Take a look at some of the big tax mistakes that most business owners make at some stage during their entrepreneurial journey.

#1 Avoiding tax talk till July 1st

That financial new year rolls around darn fast. It is really overwhelming if you wake up on July 1st wondering how you’re going to answer all the questions your accountant will have.

A much better approach is to always be aware of how your spending decisions will affect your tax. As an example, you may be looking to invest in some new equipment. Buy before June 30 and you can potentially write the expense off as tax-deductible for that year. Wait till July and it will be another 12 months before you can write it off as a business expense.

#2 Inaccurate record-keeping

Having your personal and business accounts mixed up, failing to track expenses or accepting payments without noting where they came from will give you a headache at tax time.

The larger your business becomes, the more important it is to have systems in place that keep track of your financial progress. If you haven’t already, switch to a cloud-based accounting system like Xero or MYOB and connect it to your business bank accounts, credit card and PayPal accounts. This will save you from manually entering expenses and losing track of receipts.

Something you may have to track manually is the distance you drive for work. If this is significant and is something you can claim, try keeping a logbook in the car or use a tracking app. Your accountant should be able to extrapolate from a few months’ worth of data. According to the ATO, you can claim up to 5,000 kilometres per car, per year.

#3 Not paying superannuation

You owe your employees superannuation but leaving payments until its too late could result in a penalty, even if you do end up paying the amounts owed in full. Stay on top of this responsibility to avoid losing money.

#4 Not being aware of changes to legislation

The Australian Government’s annual budget often results in changes to tax and superannuation laws. This can affect your business and result in you paying either more or less tax. If you’re not aware of the changes, you may miss out on something you can claim.

As a business owner, reading through the federal budget in detail may not be something you have time for. This is why it makes sense to seek out a reliable tax accountant who can stay on top of things for you.

#5 Attempting tax-time DIY

Yes you can lodge your tax with myTax but if you’re running a small business, for one thing this will take hours of your time. It’s also more than likely you are missing some of the knowledge you need to make sure your tax return has all the right details.

There may be penalties if you get your tax wrong. If you’re in Brisbane, the best thing you can do is reach out to a tax accountant from Mobbs & Company. We specialise in tax accounting and will be able to identify every dollar you can claim so your tax bill is as low as possible.

#6 Burying your head in the sand

Scared to file your tax return? Worried because you don’t have the money to pay a tax bill?

The longer you leave it, the worse the problem will become so you may as well get it over with. When you work with the best tax accountant you can find, they will guide you through the process to file overdue tax returns. If you do have a big bill, your tax accountant will also support you to set up a payment plan with the ATO.

See more: What happens if I don’t lodge a tax return?

Every dollar counts when you own a small business so if you’re wondering how to pay less tax, take a look at the following tips from a leading small business accountant.

How to pay less tax

Keep good records and separate bank accounts

It may be tempting to pay for something work-related using your own credit card, thinking you’ll just upload the receipt or let your tax accountant know about it later.

However, this is a habit that will cost you time and money. You’ll either find yourself scrambling to remember what you spent money on when tax time rolls around, or you’ll end up having to waste time logging into your financial systems to record your spending.

Throughout the year, make sure business expenses come out of business-related accounts and connect your accounts to a cloud-based system like MYOB or Xero.

This will make it easier to track and declare your expenses.

Be aware of what counts as work-related

While you can’t renovate your kitchen and claim it as a home office expense, there are many costs associated with working from home which may be tax-deductible. During COVID, changes have been introduced which allow you to claim 80 cents per hour for costs like electricity, phone, internet and office supplies.

Other expenses like tools, subscriptions, training courses or travel costs can also be tax- deductible if they are work-related. Ensure these are all tracked by your online accounts system or in your spreadsheets and your accountant can let you know if you qualify for a reduction in
your tax bill.

Ask about write-offs, exemptions and grants

Changing tax regulations during the 2019-2020 and 2020-2021 financial years are worth being aware of.

For example, the Australian Government revised the instant asset write-off threshold during the early months of 2020. This can apply to large purchases like vehicles, machinery or equipment; anything which is used to help your business, up to the value of $150,000.

As the Australian Government explains, “Under the instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used, or installed ready for use.”

This threshold has changed a few times over recent years so speak with your small business tax accountant if you are considering a purchase and not sure if you’re eligible.

Because you’re a small business, you may also be able to take advantage of things like accelerated depreciation, deductions in your company tax rate or small business income tax offsets. Again, it makes sense to speak with your accountant so you can figure out how to best leverage the latest tax concessions.

Super and trusts

As a business owner, it’s easy to forget about paying yourself superannuation. However, even though it’s difficult to access your super, it’s still your money. And putting it away can be tax-free, up to a certain amount each year. So this is a way of paying less tax while hanging on to more of your own money.

What’s known as a ‘discretionary trust’ or ‘family trust’ is another way to potentially save on tax. This will cost some money to set up but the basic idea is that you use it to allocate money to members of your family who have lower incomes. There is a big explainer article shared by the ABC about trusts and tax minimisation, however your accountant will be able to explain to you how this may be applicable to your circumstances.

Work with a great small business tax accountant

The goalposts shift constantly when it comes to what counts as a tax write off, how much tax your business has to pay and how to time your spending in order to maximise your tax return.

As an added bonus, your accountant may be able to identify and prove that you have paid too much tax in the past. There could be thousands of dollars that your business is entitled to claim without you even realising.

Get the help of a professional accountant who can show you how to pay less tax and keep more of your hard-earned money in your pocket.

See more: Why you need a tax accountant

As a small business owner who is based in Sunshine Coast, Caboolture, Brisbane or surrounding areas, you will no doubt realise fairly quickly that it makes sense to have a good tax accounting. And while there are plenty of them around, it can be hard to figure out how to pick a tax accountant who will provide real value for money.

Take a look at some of our tips for choosing a tax accountant and the difference between a good one and a great one.

How to pick a tax accountant

Here are five quick things a great accountant will do:

1. Meet with you more than once or twice per year

A good small business tax accountant will prepare and lodge your tax statement each year and hopefully help you get a return.

A great tax accountant, however, will touch base with you quarterly or even monthly to help you keep your finances on track.

The best small business accountants make sure you have a good idea of how much tax you will need to pay so you’re not hit with a bill you’re not prepared for at tax time.

2. Identify ways you can save

While paying tax is unavoidable for small businesses, paying too much tax definitely is. When you pick a tax accountant, ask a few questions about how they will make sure you are managing your business finances in a way that will minimise tax. This should be something they help you with throughout the year.

3. Be ethical

Your small business is obligated to comply with tax regulations by law. While it may sound counterproductive, you do need an accountant who will say ‘No’ when it comes to pushing the boundaries of what’s acceptable. They need to have a clear and in-depth understanding of current legislation and you need to trust that they are maintaining the right standards on your behalf.

Check your small business tax accountant has credentials with an organisation like CPA Australia and look at what other people are saying about them on Google Reviews or other platforms.

4. Care about your business

If you’re wondering how to pick a tax accountant, it makes sense to look for a practitioner who will act as an extension of your business rather than simply emailing you when your taxes are due.

When they are interested in the success of your business rather than simply collecting their fees, they will be in regular contact with suggestions and recommendations that have the potential to help your business grow.

You will know you have a great accountant who really cares if he or she is highly responsive and there when you need them, even during unusually busy times like the ones caused by COVID. Ideally, this person will be reaching out to you and will be a couple of steps ahead so you don’t have to waste time chasing them down.

5. Provide specialist services

Sometimes one-size-fits-all isn’t actually the right fit for your small business.

Look for an accountant who specialises in small business and tax if you want help in this area. This will make a difference as they will be able to provide advice that’s highly suitable for you and be up to date with the latest trends and best practices. Often a boutique tax accountant firm will be ideal if you’re a small business owner who is trying to choose a tax accountant. As the saying goes, they should be ‘big enough to know and small enough to care’.

How to be a great client

Tax accountants offer a service and often the value they provide will be boosted if you match their enthusiasm for good accounting with your own.

This means using a cloud-based accounting system and ensuring that all your expenses and payments are recorded by the system. When you do this, your tax accountant will be able to spend less time shifting through receipts and more time focusing on how to help your business grow.

As a ‘great’ client, you’ll make time for your accountant and work with them to make sure you’re aware of your business’s current status and its break-even points. By being proactive and keeping your accountant in the loop, you’ll be able to build a really beneficial working relationship.

See more: Top tax tips for small business owners in Queensland

Tax time rolls around each year whether you like it or not. As a small business owner, it can feel overwhelming, however it is possible to establish a routine and set of best practices that make lodging your tax return a more manageable experience.

Take a look at some tax tips for small business owners from a leading accounting firm in SE Queensland that focuses on tax-based accounting.

1. Work with a professional

This is probably the most essential tax tip for small business owners in Queensland or anywhere.

You are a specialist in your field and you are busy running your own business. Just as you wouldn’t advise your customers to try to do what you specialise in themselves, the same applies for managing this often complicated area of your finances.

Yes, it’s possible to take on your taxes yourself but you don’t know what you don’t know. It’s possible you could be missing out on some significant tax refunds, or that you could make a mistake which marks your business as not compliant with tax legislation.

Ideally, you will form a relationship with your tax accountant and meet regularly so you don’t have to deal with tax issues in one hit after June 30th.

2. Have a tax ‘bucket’

As the saying goes, the only inevitable things in life are death and taxes!

You can’t avoid paying taxes so you may as well be prepared. For every dollar in revenue your business earns, put a percentage aside. This amount can be advised by your small business tax accountant.

Keep this money in a separate account and don’t touch it. This way, you won’t be faced with a bill you can’t pay at tax time.

Another strategy is to make a quarterly tax payment instead of an annual one. You can work with your accountant to establish an estimate of what your tax bill will be and factor this into your quarterly BAS/GST. Doing this spreads the load. Many small business owners find it to be a more manageable way to deal with tax payments.

3. Separate and keep track of your revenue and spending

These days there are so many options to track revenue without the need for shoeboxes full of paper receipts.

Talk to your small business tax accountant for tips about the best systems and platforms to go digital when it comes to tracking your finances. For example, you may wish to use software like Xero or MYOB, which connect to your bank accounts and keep detailed records. These platforms are extra helpful because they work via ‘the cloud’, meaning you can log in from any device.

As a small business owner, it’s also important to keep your personal and professional spending separate. Set up different accounts and don’t be tempted to spend business money on personal needs, or vice versa.

If you have a bookkeeper staying on top of these systems on your behalf, you’ll find it much easier to see where every dollar has come from and been spent during the financial year.

4. Make the most of asset write-offs

In Australia, small businesses are eligible for instant asset write-offs for capital assets up to $30,000.

This means you can invest in capital assets that are used for business purposes and claim the expense as a tax deduction. A vehicle or piece of machinery could be an example of this.

Make sure you buy the item during the financial year that you intend to claim it in. And speak with your small business accountant first to make sure you can afford the item and will be able to claim the expense in your taxes.

5. Be clear on tax deductions

While your accountant is the expert, another tax tip for small business is to be aware of what you can and can’t claim as a tax deduction. This will help you decide how to spend your money during the year.

During COVID, legislation covering things like working from home may impact your tax return. This is something to note and discuss with your accountant.

Business-related expenses which are tax-deductible include:

– Work-related travel expenses (keep receipts or make notes in your online accounting software)
– Equipment like computers, printers or tools
– Depreciation on assets such as machinery or equipment
– Contributions to superannuation
– Insurance costs
– Subscriptions and memberships
– Training and education costs
– Uniform costs
– Marketing expenses

Your tax accountant’s fees may also be tax-deductible, which is another reason to invest in the
support of a professional to make life as a small business owner easier.

Remember that you may be asked to prove you have spent money on tax-deductible items so keep track with software and/or hard copy receipts.

6. Be open about bad debts

If a client hasn’t paid for something, this can be recorded as a bad debt and may be eligible for a tax deduction.

Speak to your small business tax accountant about any amounts outstanding and whether they should be written off in this way.

7. Be aware of tax depreciation

The assets your business owns like office space or heavy machinery lose value over time. This is known as depreciation.

Even the furniture and equipment in your home office could be identified as depreciating in value.

Another tax tip for small business owners is to share evidence of the assets you own and get recommendations on how to quantify depreciation.

8. Pay your super on time

As an employer, you owe your team superannuation payments. This is a tax write off if it is paid in the financial year when it is due.

Similarly, personal superannuation contributions can be a tax write off. This goes for individuals who choose to top up their super and small business owners who opt to pay themselves super.

See more: Good vs Great: how to pick a tax accountant

Sometimes life gets busy and taking care of financial matters falls by the wayside. However, no matter what is going on, it is still a legal requirement to lodge a tax return in Australia.

This article will take a quick look at what you need to do to lodge a tax return and answers the question: ‘What happens if I don’t lodge a tax return?’

Tax returns: What you need to know

As explained by the Australian Government, “After the end of the Australian income year (30 June), you lodge an annual tax return to tell us how much income you received and tax you paid.” Once you have lodged your tax return, the government sends you a notice of assessment. Then will issue your tax refund if you're entitled to one, or let you know if you owe money.

How to lodge a small business tax return

You do have the option to lodge your tax yourself, using online software called myTax. However, as a small business owner, a sole trader or even as an individual, it can be worth your while to lodge your tax with the help of an experienced tax accountant.

Your accountant will take care of the tax process for you and ensure all documents are lodged correctly with the Australian tax office. They will let you know how much tax you owe or how much you can expect to receive as a tax refund. You can also share your bank details so the refund is automatically deposited into your account.

While the deadline for lodging a tax return for individuals is October 31st, when you work with an accountant you are usually able to extend this to May 15th the following year. This gives you some time to make sure you can pay any outstanding tax bills.

What happens if I don’t lodge a tax return?

Declaring your income and the tax you have paid is compulsory for Australian individuals and small business owners. Even if you believe you have earned below the threshold for paying tax, it is important to declare your income.

If you don’t lodge a tax return, you may think it won’t matter and that nobody will notice. However, the tax office now relies on digital systems which can identify your lack of activity in this area. Fines will be applied for each 28 day period that you are late with your tax return (although this is capped).

According to the ATO, the penalties for individuals, small and medium businesses are as follows:

– For a small entity, FTL penalty is calculated at the rate of one penalty unit ($222) for each period of 28 days (or part thereof) that the return or statement is overdue, up to a maximum of five penalty units.

– For a medium entity, the penalty is multiplied by two. A ‘medium entity’ is a medium withholder for PAYG withholding purposes, or has assessable income or current GST turnover of more than $1 million and less than $20 million.

If you don’t lodge a tax return, you may hear from an ‘external collection agency’ that is tasked with obtaining your lodgement on the government’s behalf.

As you can see, it makes sense to stay on track when it comes to your tax return. Ideally, if you’re a small business owner, you will work with your accountant throughout the year so you have a ballpark understanding of how much you will owe and be able to keep this money aside
so that lodging a tax return isn’t a stressful experience.

What to do if you are late lodging a tax return

Even if you haven’t filed a tax return for several years, the best thing you can do is take action. The problem is not going to go away so you may as well start taking steps to put it behind you.

If you are late to lodge by a few weeks or months, you may be able to apply for an extension. As the tax office states, “If you can’t lodge by the due date, you should contact us as soon as possible so we can work together to reduce the risk of a penalty.”

This will be much easier if you get the help of an accountant who has a good relationship with the tax office and can speak to a representative on your behalf.

If you are late by several years, be aware that there may be a penalty involved. However, if you have been paying taxes, just not lodging a return, it is also possible that the government may owe you a refund.

Safe harbour

‘Safe harbour’ can protect you from a penalty in the event of you not lodging a tax return on time. This is especially helpful during the 2020 COVID outbreak, when accountants are swamped with work and many small business owners are distracted by simply trying to stay afloat.

The ATO says that, “If you engaged a registered tax agent or BAS agent to lodge your return or statement, you will not be liable for FTL penalty if both of the following apply:

– You can show that you provided the agent with all relevant tax information to enable them to lodge the return or statement by the due date.

– The agent’s failure to lodge the return or statement was not because they were reckless or intentionally disregarded the law.

To be eligible for safe harbour, you will need to provide evidence that you supplied all of the relevant information to enable the agent to lodge the return or statement by the due date. If we determine that the safe harbour provision does not apply, you can still seek a remission of FTL penalty.”

So to answer the question, ‘What happens if I don’t lodge a tax return?’, the answer is that it will eventually catch up with you, probably in the form of a fine. To avoid this, find an individual or small business accountant who can help you stay on top of your tax obligations so you can file each year without too much stress.

See more: Six tax time no-nos for small business owners