Avoiding small business tax time errors
The most common errors small businesses make when completing their tax returns are failing to:
- declare all income
- account for private use of business funds or assets
- keep all required records or have adequate record-keeping systems.
To avoid making errors this tax time, first ask yourself if you have:
- told us about all your income including cash and online sales, dividends, interest, capital gains or one-off transactions such as selling equipment or other capital items
- created a clear distinction between business and personal services income (PSI)
- split your income appropriately for example, where the PSI rules apply, income is only attributed to the individual performing the work
- kept all source documents
- undertaken reconciliations on a regular basis
- accounted for stock taken for private use
- accounted for directors’ fees or drawings
- used loan accounts in an appropriate way consistent with the ATO’s view
- correctly apportioned expenses where an expense is for both private and business use (for example, motor vehicle expenses or rent expenses).
If you are planning to claim business losses, you may also need our assistance to understand how to correctly claim current and prior year losses.
Small businesses rely on the professional assistance of their accountants. Our advice to business owners throughout tax time is vital to avoid common errors. The benefits of regular contact with us, including letting us know when your circumstances change, are key to avoiding mistakes. Call Omnis Group in Subiaco Perth on 08 9380 3555.