Hello! When I started my own small business, I didn't really give much thought to how I would pay tax. I mean, I realised that I would have to pay tax at some point, I just didn't understand when I would have to pay it or how much I would have to pay. I tried doing some research, but I soon discovered that tax is a very complicated business. One day, I got a letter from the tax office asking me why I had not filed a tax return for the previous year. I panicked and contacted a tax service. The tax service was great. The staff looked at my accounts and calculated exactly how much tax I would need to pay. This blog is all about the benefits of using a tax service.
Tax planning refers to legitimate measures you can take to lower your tax liability. As a savvy taxpayer, you should use tax planning schemes. However, it's important to ensure you don't accidentally or purposefully use tax avoidance methods instead. How can you ensure that you are taking the right approach? Learn more about tax services and take a look at these tips.
1. Track Business Expenses Carefully
If you run a business or are self employed, you need to be sure that you only deduct business expenses from your business income and that you don't include personal expenses. So you don't accidentally muddle your records, keep all of your business receipts, and if you are making a purchase that involves both personal and business items, ask the sales clerk to ring up the purchases separately.
To make this all a bit easier, consider using separate accounts for business and personal reasons — while most business owners with employees already do this, many self-employed people forget to make that leap. In addition, you may want to use expense tracking software and set up a time weekly where you go through receipts to stay on top of things.
2. Work With an Accountant
To ensure you don't accidentally make untrue or erroneous claims on your tax return, you may want to work with an accountant. This can be a great solution if you are a business owner, a frequent investor, someone who owns rental properties, or anyone who is managing money from multiple income streams.
When looking for an accountant, make sure you choose one is experienced and renowned for being truthful. If a company advertises the ability to lower your tax liability to an amount that seems off base to you, they may be using artificial methods, and you may want to check their reputation.
3. Understand and Avoid Tax Avoidance Schemes
To help you learn more about the differences between tax planning and tax avoidance, the ATO has identified a number of tax avoidance schemes, and you may want to be aware of them. For example, some taxpayers divert personal services income to self-managed super funds. In other cases, taxpayers claim research and development tax credits for farming activities that aren't eligible for that credit. Still other schemes include trusts that hide taxable income and sham non-profits. Even if you have a money manager, you need to be sure they aren't doing those things in your name -- a trustworthy accountant can help you keep an eye on the situation.Share
26 April 2017