When you’re running a small Australian business, every single dollar counts. You want to be able to invest your money in your business, but there are lots of expenses that reduce your capital. The amount of money you lose to taxes could mean the difference between success or failure for your business. Here are some ways you can reduce those numbers and come out on top.
1. Hire family members
Hiring family members to do any task in your business is a surefire way to save on some taxes. Keep in mind, the job you give them doesn’t have to be particularly important or complex. Your sixteen-year-old nephew doesn’t need to become your accountant for this to be viable.
Even simple tasks like moving boxes as a part of moving business would be sufficient enough for you to be able to file for some tax savings. Business deductions are possible for reasonable compensation that would be paid to that person. This allows you to lower your taxable income somewhat, while also being able to avoid certain types of taxes such as FICA.
2 Pay off retirement early
If you’re self-employed, your taxable income can be reduced in a number of ways. Chief among them include investing in your retirement whenever you can. The money that you put into your retirement account isn’t taxed now, but rather it will be when you decide to withdraw those funds at an appropriate time during your actual retirement.
The amount of money you can contribute depends on your age. If you’re a small business owner under fifty, you’re limited to five and a half thousand dollars at a time. Those who are over fifty can contribute six and a half thousand towards savings.
3. Deduct the home office
A lot of small business owners run their operations from home for reasons of convenience. However, very few of them are aware that you can actually deduct some of the costs of running your home office from your taxes. These expenses include mortgage interest payments, repairs, and utilities.
Keep in mind that you have to figure out what portion of your home is actually dedicated to your business. You could even check if your home office is eligible for a business tax depreciation in Australia. If you’re in the clear, you need to do the math and find out how much you get to save. There are lots of examples of tax software that can roughly calculate how much you are able to deduct off of your home office.
4. Don’t forget your car
A lot of Australian business owners own a car. If you have one, you probably use it to get around for business purposes at least once in a while. In fact, you might not even be aware of how much it actually impacts your business. This is something you can count on if you want to deduct the costs of taking care of it.
What kind of expenses do you have to cover for your car? You need to buy the fuel, clean it, and have it checked for maintenance occasionally. These are costs that help you conduct day-to-day business, which means that they are potentially deductible. If you crunch the numbers and calculate how many miles are driven for the purposes of a business, you can use the mileage percentage for a tax deduction on all of the expenses.
Reducing your taxes is an easy and effective way to increase the amount of money your business has available. All you need is a bit of knowledge in Australian tax law, lots of paperwork and you’re pretty much good to go. Just make sure you cover all of your bases and you’ll end up with a lot more profit than you might have expected.
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