July 26, 2021
Individuals must gather all the documents for lodging the taxes so that they can avoid incurring unnecessary penalties and help you plan all your finances accordingly. Every year, businesses have to prepare for a tax return. This is something, which is pretty much non-negotiable. But the tax preparation will either be a little tough or straightforward because it will depend on the complexity and size of the business you operate. Making proper tax preparation difficult for some, and such reasons, having the tax prep checklist 2021 beside you will give individuals a notion of the things one needs before the tax day arrives.
Tax Preparation For A Business: The Checklist
Given below is a helpful tax preparation checklist that can help all business owners during their tax preparation. Please take a look!
Make Sure To Be Familiar With The Tax Time
In Australia, the due dates for the tax returns are arranged according to the client type. These due dates are the date with which the return is lodged and the due lodgement date. Individuals who want to stay on the right track must look at the due dates for paying and lodging the tax returns provided by ATO or the Australian Taxation Office. They can visit their website anytime to check out the latest updates.
Gather Up All Your Financial Records
Business owners who have decided to lodge their taxes need to make sure that all their financial records are accessible. Here are some of the documents one needs to have in-store:
When individuals have all the records with them, the tax preparation will become a lot easier and hassle-free. It’s suggested that business owners opt for accounting software that will help to generate and store all these records. It will help in saving them a lot of time and ensure that their documents from getting damaged or lost. Remember, it’s essential to keep all the records for five years when it comes to tax.
- Balance sheet.
- Depreciation schedule.
- Partnership agreements.
- Income statement.
- Credit card and bank statements.
- Asset purchase.
- Business tax return from the previous income year.
- Accounting documents.
- Estimated tax payments.
Learn About All The Tax Deductions That You Claim
Business owners must take in every penny which goes in and out from their business account, including the taxes. Individuals will surely not pay more when they can easily lessen, right? That’s why one must know about all the deductions they can claim. The Australian Taxation Office has already explained the type of deduction individuals are entitled to receive when operating a business. Here are some of the main takeaways:
- An individual’s expenses are categorised into three groups- investments that can be claimed within the same income year, assets that can’t be claimed and claimed over several years.
- The deduction, which a business owner is trying to claim, should be direct with the accessible income they earn.
- Individuals can use two methods when it comes to accounting, such as cash-based and accrual-based accounting. The accrual accounting will enable the business owner to claim the expenses within the income year. But the cash-based accounting will allow an individual to claim the bill has been paid.
- Individuals must remember when they started their business. This also includes the time they spent before the business became official. This will help the business owner obtained all the deductions which they are qualified for.
Prepare Your Payment Details
Before making the payment, it’s highly essential to ensure that all their details are completed and correct. Doing so will help in preventing inconveniences, such as unwanted debt collection activity and delays. But the most crucial information is the PRN or Payment Reference Number. It’s also known as an EFT code, which guarantees that you are paying is credited to the correct account.
Remember, different kinds of taxes will carry different payment reference numbers. Individuals have to make sure that they utilize the correct PRN for the tax they are paying for. Also, Individuals have to prepare a payment slip if they wish to make the payment through the post office. This is normally available on the statements of accounts or the notices of assessments.
The Employee Payment Figures And Summaries
When preparing for the tax returns, all business owners must include the payment summaries and figures of the employee. Apart from that, they also have all the government payments or subsidies along with information on the salary sacrifice. Individuals must double-check all the information and make sure that they are up-to-date.
Motor Vehicle Information
If any motor vehicle or vehicles are used for business-related purposes, one must provide data of the logbooks and the business kilometres. Apart from that, the vehicle expenses should be also be included when preparing for the tax return. Otherwise, it might give birth to unwanted issues.
Learn About The Taxes
In Australia, individuals must carry good knowledge about their taxes, and they should also know about all their obligation based on their business income, activity and structure. People who are sole traders will manage and operate their business by themselves.
So, when they prepare their taxes, they should use their TFN or tax file number when paying or lodging their taxes. They should also apply for an Australian Business Number and register themselves for GST [Goods and Services Tax] if their yearly turnover is over $75000.
On the other hand, if individuals can control and manage a business or assets, their business structure is viewed as trust. So, when preparing for the taxes, one must have their very own TFN for paying or lodging taxes, take a look at the eligibility for small business concessions, apply for an ABN and register for GST.
When business owners prepare their taxes in advance, it will allow them to maintain a healthy cash flow. The tax preparation checklist contains all the basic needs when it comes to lodging the taxes. All individuals should prepare their checklist properly and correct all the errors or mistakes before lodging their taxes. It’s always better to get in touch with experts from Accountant Perth for flawless tax preparation and filing.