Small business owners dread the end of each financial year because of the tax bill stress they undergo. This is because many small businesses struggle financially and some even end up closing down because of financial distress. That said, it is fundamental to save every coin by reducing expenses such as tax bills. A Perth tax accountant can help minimise the tax bill in various ways:
Instant asset write-off
This is one of the ways a tax accountant can reduce your tax liability. Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use. The threshold amount for each asset is now $150 000 (up from($30 000). Business turnover must be less than $500 million (up from $50 million).
Maintaining a Business Vehicle Log Book
A qualified tax accountant should provide guidance on maintaining a vehicle logbook. This should be done for at least 12 weeks during the year. With this, a business can rightfully claim back vehicle expenses when filing taxes. According to Australian Law, the legitimate use of a vehicle in business is tax-deductible. The tax accountant should keep all records and invoices related to the vehicle expenses.
Temporarily Deferring Incomes and Forwarding Expenses
It is possible to cut down on tax expenses by deferring income to the next year. This means that income earned in a certain year may be carried forward to the next year. That way, tax on that income can only be charged in the following year. Expenses related to the deferred incomes must also be carried forward to the next year. An experienced tax accountant will provide guidance on the whole deferring process.
Claiming Deductions for Unpaid Expenses
Any qualified tax accountant should provide insight on ways of claiming unpaid expenses deductions. A business can claim deductions for some expenses even when they remain unpaid by the end of the financial year. These expenses include staff and salary wages or staff bonuses. Deductions for unpaid repairs and maintenance can also be claimed on tax returns.
Writing-Off Bad Debts
Almost every business operates on credit, especially for loyal customers. However, this is sometimes risky because some customers refuse to pay. The debt becomes a bad debt. Luckily, bad debts are tax-deductible when written off. The tax accountant can write off some bad debts to reduce the tax liability in a certain period.
contact Griffiths Advisory today to minimise your tax bill
Reducing tax liability is a great financial achievement for any small business. However, business owners cannot enjoy lower tax bills without professional help. That said, hire a tax accountant from a West Australian tax accounting firm you can trust. Contact Griffiths Advisory today!