Talking Cents

How to Avoid Common Tax Filing Mistakes Made By Small Businesses

Tax filing can be a challenging task for small businesses. As a small business owner, you should make sure that your tax returns are accurate and submitted on time. However, mistakes can easily happen, which can lead to penalties and fines from the Australian Taxation Office (ATO). In this article, we will discuss how to avoid common tax filing mistakes made by small businesses.

1. Keep accurate records

One thing that you can do to avoid tax filing mistakes is to keep accurate records. You need to maintain records of all your business transactions, including receipts, invoices, bank statements, and other financial documents.

You can use a suitable accounting software to help manage your finances and make reports that you can use to prepare your tax returns. By keeping accurate records, you can ensure that your tax returns are accurate and up-to-date.

2. Understand your deductions

Another common mistake that small businesses make is failing to claim all the deductions they are entitled to. As a small business owner, you may claim a range of deductions, including expenditures such as rent, utilities, supplies, and wages.

You need to understand what deductions you are entitled to and keep accurate records of your expenses so that you can claim them on your tax return.

3. Separate business and personal expenses

It's important to keep your business and personal expenses separate. If you mix your business and personal expenses, it can be challenging to work out which expenses are tax-deductible.

You need to open a separate bank account and credit card for your business and use them exclusively for business expenses. By doing this, you can ensure that your tax returns are accurate and avoid any confusion. 

4. Know your deadlines

It's crucial to know when your tax returns are due. As a small business owner, you should submit your tax returns before the deadline to avoid penalties and fines. The due date for tax returns varies depending on your business structure, so you need to check with the ATO to find out when your tax returns are due.

5. Seek professional help

Tax filing can be complicated, and mistakes can easily happen. If you're unsure about anything, it's a good idea to seek professional help. A proficient accountant can help you navigate the complexities of tax law and ensure that your tax returns are accurate and up-to-date.

Tax filing can be a challenging task for small businesses, but by keeping accurate records, understanding your deductions, separating business and personal expenses, knowing your deadlines, and seeking professional help, you can avoid common tax filing mistakes.

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