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What your tax time checklist should include

It’s tax time! That was our best effort to try and make this time of year sound a little more exciting. But fear not, we’re here to make completing your tax return easier and help you receive the return you’re entitled to.

We encourage the use of a checklist to really feel the satisfaction of crossing off each task once it is complete. Even if you have already completed a task, write it down and tick it off. It feels great, trust us.

Go through your paperwork

Yep, there’s no avoiding the paperwork, so go ahead and put this on your list of things to do. Oh, you haven’t spent the time to get your paperwork in order since the last financial year? That’s completely fine, because there’s never a better time to get on top it than now.

We know it can be time consuming to begin with, but think of how cruisy your next tax return will feel once you sorted it out and have a system to keep it all in check.

A bit of hard work now goes a very long way to helping yourself next financial year.

Something for the small business owners:

There’s good reasons to get your records up to date being a small business owner. You’re able to lodge tax returns faster and without the hassle of rummaging, meet tax obligations as well as help manage your cash flow. If you’re also using an accountant for your business, this would mean less work for them to prep and therefore lower accounting fees.

Claim your deductions

It might seem like the most obvious of tasks to put on your checklist, but claiming all the deductions you are eligible for makes a huge difference to your tax return.

It’s important to remember to be able to justify any expense you are claiming as a deduction. You’ll have to know how the claim was calculated if you are asked to show proof.

Quick note for small business owners:

As a small business owner, many expenses incurred in running your business can be claimed as a deduction (that’s a win). Deductions could include equipment, legal advice, rent and many more.

Speak to the experts

Please don’t make your tax time checklist without adding this task. There are plenty of experts around to help you out, so use them. Seeking professional advice whether it’s tax, accounting or financial advice, can help prepare you for tax time this year and into the future.

If you’re a small business owner:

Something else to remember is to check that your insurances are up to date, especially if your circumstances have changed in the last year. Anything from renovating your premises, buying new equipment and adding more staff could mean you are not fully covered under your current insurance policy. For more information regarding why you should review your business insurances, read our article.

Plan, plan, plan

Now that you have your tax time checklist in order and are working through each task, it’s the perfect time to reflect on your financial goals and priorities. Gathering all of this information is the perfect start to understand if certain strategies are working and identify those which aren’t.

For those of you who are running your own business, there are a few more things you can add to your tax time checklist on top of our previous points to make a bigger difference to your return:

Make use of the new instant asset write-off threshold

As of 2 April 2019, the threshold has been lifted by $5,000 (that’s another win). As a small business owner, you can now claim up to $30,000 worth of assets for your business all the way up to 30 June 2020. This means that if you purchase an asset (new or second-hand), you can claim a deduction for that asset used within your business, so make sure to add this task to your checklist. An important reminder is that any private use needs to be subtracted off the amount you claim.

This instant asset write-off is especially important for those of you who are self-employed and rely on assets such as cars, tools, etc. What’s good to remember is to not make any rushed decisions purely for the tax benefits. If you’re thinking ‘What asset can I buy to write it off on tax?’ – This isn’t a great idea.

For more information regarding instant asset write-offs, read this article.

Utilise the small business income tax offset

If you are running a small business as a sole trader and have a turnover of less than $5 million for the 2018-19 income year, you may be able to utilise tax offsets – so add this to your checklist to find out if you are eligible. This would give you an up to 8% deduction from the tax on your business income, reducing your tax paid up to $1,000 each year.

The best part is that income tax offset is set to increase to 13% in 2020-21 and 16% in 2010-22.

If you’re a small business owner and find starting or building your business is overwhelming or challenging, we can help. You can talk to your local Mortgage Choice expert about business lending where we can help you with starting or growing your business. We can also discuss the different business loans and providers to find the small business loan that will be best for your business.

Posted in: Small business

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