If you have just opened your small business, you might be looking for ways to lower your company’s tax liability. This aspect includes evaluating the current financial performance of your company as well as reintroducing and adjusting your current tax strategy.
Managing taxes as a small business owner can be incredibly stressful. There is a chance that you might be afraid of launching your business altogether because you are afraid of making tax mistakes.
The following tips will help.
Keep Your Business and Personal Money Separated
The first tip that you must follow at all costs is to keep your business money separate from your personal money. This isn’t difficult at all. As a matter of fact, it might be as simple as opening two regular checking accounts at your bank – one for business and one for personal use.
The thing is that when you blend your business money with your personal money – it can become incredibly challenging to keep track of where your money is coming from and how much money you should be putting toward taxes.
Make Sure to Complete a Tax File Number Declaration
It doesn’t matter how many employees you have – everyone should obtain a tfn form application, which will allow you, the employer, to calculate the amount that you have to withhold from the employee’s payments.
The conditions for applying for a TFN in Australia include the following aspects:
- Your visa allows you to stay in Australia indefinitely.
- You reside in Australia.
- You are a permanent migrant.
- You are a temporary visitor.
- You have a foreign passport.
Nonetheless, as a small business owner, make sure all employees complete a tax file number declaration.
Use Bookkeeping Software
Believe us when we tell you that taxes can become incredibly easy if you use bookkeeping software. It doesn’t matter whether you hire someone to do the bookkeeping for you or whether you do it yourself – bookkeeping is absolutely mandatory if you want to keep your taxes in order.
In fact, this software can be a total lifesaver during the stressful tax season. The right bookkeeping software will sync with all of the expenses, such as your business credit card and any other potential spending that takes place directly through your bank accounts.
It goes without saying that bookkeeping is absolutely mandatory to stay on top of your taxes as a small business owner. It wouldn’t hurt if you were to hire an accountant right from the very start of launching your small business.
Use Your Business Account for Business-Related Investments
To keep taxes smooth and easy, we recommend spending money only from your business account if it is related to your business. For instance, you might have to invest in managed IT services, in which case, you should definitely be making the payments from your business account alone, as these are strictly business investments for your business.
On that note, every time you need to make a transaction for your business, dip into the business account instead of the personal account that you would normally use for personal things, such as groceries.
