If your startup business is currently preparing for its first business tax return, then congratulations are in order. Your business has officially survived its first year of operating – a feat that a surprising amount of startups don’t manage to reach! Whether your company is in its first or eleventh month, take a moment to separate the stress of navigating a tax return for your business, from the celebration of simply making it to June 30th.
Of course, after taking a beat to acknowledge this milestone, you’ll naturally want to jump right into preparation for your business tax return. So let’s get into the nitty gritty of what you need to know to prepare your lodgement as we approach this end of financial year period. With careful planning and preparation, you can ensure that you and your financial team stay well-organised when collating all required documents and fine-tuning any depreciation schedules.
Let’s get right into it below on our EOFY tax tips for startups.
Keep personal and business tax records completely separate
Let’s start by emphasising a basic rule that you’ve probably already heard from your accountant or other financial advisors: your business taxation should be kept totally separate from your personal tax documentation. Personal and business tax returns are filed for the Australian Tax Office for different reasons, and in different ways. The former reports an individual’s total income, deductions and credits, to check their data is in line with government records. Anything that can be claimed or deducted is then paid back, and the total taxable income is amended.
For businesses, a company’s income and expenses are recorded and assessed. There are different tax rates depending on the business structure. For example, if your start-up is defined as a sole tradership (in which case your business expenses will be reported under your personal tax return), a business partnership, a trust, or a fledgling company. The process is generally a bit more complicated, with stricter compliance requirements, but the focus is on operational costs.
Both personal and business tax returns take place at the end of the financial year, which falls in Australia and other countries around the world on the 30th of June. So you’ll definitely thank yourself come the end of June if you’ve kept your business spending on your business credit card and have managed to separate your personal and business documentation in two separate folders.
Review your company’s financial and operational records
As a small business owner, you have more information to collect and resources to prepare before you can file your tax return at the end of June. But here’s a quick summary of what you need to do at EOFY if you have a start-up in Australia:
- Review your profit and loss sheet and create a balance sheet (to declare your total income and provide a summary financial statement).
- Record your expenses, creditors and debtors (to assess what can be claimed back).
- Conduct a stocktake and assess your assets (to calculate depreciation expense claims).
- Show proof of meeting superannuation requirements through digital and paper receipts and records (to demonstrate the legitimate and transparent operation of your business).
Want to know our number one EOFY tax tip for preparing your first business tax return? Don’t leave it all up to the last minute! Working under time pressures will make the process more stressful, and increase your chance of making mistakes, especially as it’s your first one filing on behalf of an entire business – which may include transactions that you weren’t involved in at all. So it’s essential you spend the appropriate time and attention to get it right.
Timeline & Deadlines
To avoid the last-minute rush, or the risk of missing important deadlines, here’s a timeline of key dates for business owners to save during Australia’s EOFY.
30th June
Your SGC (super guarantee contributions) must be paid to qualify for tax deduction.
28th July
You need to pay your quarterly PAYG instalment notices today, as well as your SGC (super guarantee charge) statement.
28th August
Your taxable payments annual report is due.
21st October
If you’ve registered for annual payment, you’ll need to pay your annual PAYG withholding payment instalment.
28th October
Superannuation is due to be paid for your eligible employees.
31st October
Your tax reporting must be completed by this day for the financial year (unless you’re working with a tax agent – in which case you have an extended lodgement period that lasts until 15th May).
What can I claim back as a business owner?
You can claim a business tax deduction for most operational expenses, provided you have a record of them and they are directly related to your business’ income.
This can be for travel expenses, including accommodation and food costs, fuel costs if you drive for work (excluding your commute), the costs of setting up a website and in some cases marketing your business, and the purchase of machinery and specialised software, tools or equipment (and depreciation of those assets) that were necessary for the operation of your enterprise. Staff training and a portion of salaries and super payments may also be deductible for your business in some cases.
You must also be able to provide receipts and records for these purchases, as well as provide any additional evidence (if requested by the ATO) that these expenditures were directly related to your business operations. Be sure to work with your financial team or trusted business accountant to make a full list of your deductions for FY24.
Tax Tips For Start-Ups In Summary
Tax rules are different for companies as for individuals, and they even differ between the different types and sizes of companies. Therefore, if you’re handling your first business tax return at the EOFY in Australia, it’s wise to seek professional advice from a tax agent or accountant. They’ll be able to provide you with the relevant information specific to your start-up, as well as ensuring the information and statements you provide are accurate.
So as we reach the end of the fiscal year, don’t shoulder the burden by yourself, even if it’s simply using the help of small business checklist calendars and apps to help you stay on top of key EOFY deadlines.
Prepare in advance, make your statements clear and accurate, and you’ll have your first of many business tax returns sorted.
