The A - Z of Preparing Your Small Business Tax Return
Preparing and lodging your small business tax return requires careful planning and attention to detail. Failing to meet your tax obligations can result in penalties and fines from the ATO, which can negatively impact your business's financial health. In this guide, we'll provide a step-by-step approach to preparing and lodging your small business tax return for 2023. We'll cover essential topics such as ATO deadlines, tax refunds, and the benefits of lodging your tax return early. We'll also explain how you can lodge your business tax return with Thriday. By following our guide, you can maximise your tax refund and avoid any last-minute stress. So, let's get into it.
When Are Business Tax Returns Due?
As a small business owner, knowing the ATO deadlines for lodging your business tax return is important. The deadline for submitting your 2023 small business tax return as a sole trader, partnership or trust is 31 October 2023. Company tax returns are due by 28 February 2024. You may face penalties and fines from the ATO if you miss these deadlines.
The ATO allows for specific lodgment schedules if you plan on using a registered tax agent to file your tax returns. As a result, tax agents can lodge returns for their clients after the standard 31 October or 28 February deadline.
To ensure you meet the tax return deadlines, preparing your tax return well in advance is essential. With Thriday's automated tax and accounting software, you can easily stay on top of tax dates and meet ATO requirements. Thriday's software automatically tracks and categorises your income and expenses throughout the year, making it easier to prepare your tax return come tax time.
In addition, Thriday's software can also help you avoid potential errors and omissions in your tax return by providing automated checks and balances. This can help ensure your tax return is accurate and compliant with ATO regulations. To meet the ATO deadlines for lodging your small business tax return, join Thriday for free today.
Can Business Tax Return Due Dates Be Extended?
If you cannot lodge your small business tax return by the 31 October deadline, you may be eligible to apply for an extension or lodgment deferral. However, it's important to note that not all exemption requests will be approved, and the ATO may still impose penalties and fines for late lodgment.
To apply for an extension, you must meet specific criteria and provide a valid reason for your inability to lodge your tax return by the deadline. Some valid reasons for an extension may include illness or other personal circumstances that prevent you from meeting the deadline.
It's important to note that if you do not receive an extension, you will still be required to pay any tax owed by the 31 October deadline. Failure to do so may result in penalties and interest charges from the ATO.
While it is possible to apply for an extension to lodge your small business tax return, it's important to do so only if you have a valid reason and to pay any tax owed by the original deadline. By using Thriday's accounting and tax software, you can easily avoid the need for an extension and meet your tax obligations.
Are Business Tax Returns Made Public?
As a small business owner, you may wonder whether your tax returns are available for public scrutiny. The good news is that your tax returns are not made public by the ATO, and your personal information is protected by privacy laws.
However, it's important to note that some information from your tax return may be shared with other government agencies for statistical and reporting purposes. This information is aggregated and includes no personal information that could identify you or your business.
In addition, if the ATO audits your tax return, they may request additional information or documentation to support your claims. In this case, some information about your business may become public, but only to the extent necessary to resolve the audit.
To ensure your tax return is accurate, keeping thorough records of all income and expenses throughout the year is important. By using Thriday's automated accounting software, you can easily track your business profit and confidently prepare your tax return.
How to Lodge a Business Tax Return With Thriday
Lodging your small business tax return with Thriday is easy and stress-free. With our automated accounting software, you can keep track of your income and expenses throughout the year, making tax time take no time at all.
To get started, join Thriday for free. Once you sign up, you can open a bank account* and Visa Debit card*, allowing our accounting and tax software to track all your income and expenses in real-time automatically. Our software will then categorise your transactions and calculate taxes, making tracking your business profit and expenses easy.
When it's time to lodge your tax return, Thriday will generate an estimated tax return based on your bank account information. You can then review and edit the details before lodging your final tax return with the ATO.
Thriday's software also includes all the necessary key tax return dates, so you can be sure you're meeting all the ATO requirements. And with our expert support team available to answer any questions, you can confidently lodge your tax return on time.
In addition to our tax software, Thriday also offers BAS lodgment to help you manage your finances year-round. With our help, you can focus on running your business while we handle the paperwork.
What is a Notice of Assessment?
A Notice of Assessment (NOA) is an official document issued by the ATO that outlines the result of a tax return that a business has lodged. The paper summarises a business's taxable income, tax deductions, tax payable, and any refunds or credits that may be due. It also specifies any penalties or interest charges that may be applicable if the business has failed to comply with tax laws or made errors in its tax return.
A Notice of Assessment is an important document as it confirms the final verdict on your tax position for the financial year and whether you owe money or you have overpaid and will be due a refund.
Benefits of Lodging a Business Tax Return Early
According to recent statistics from the ATO, the average tax refund for small business owners in Australia is $2,743. By lodging your tax return early, you can receive your tax refund sooner and use it to reinvest in your business or to help with cash flow. Lodging your small business tax return early can have several other benefits:
- Ensure you avoid potential penalties and fines from the ATO.
- Identify any errors or omissions and correct them before the due date.
- Determine your business performance and financial health sooner.
As you can see, lodging your small business tax return early has several benefits, so don't wait until the last minute – sign up for Thriday today and reap the benefits of lodging your tax return before it's due.
What Does the ATO Review When Auditing Business Tax Returns?
While most small business tax returns are processed without issue, the ATO conducts audits to ensure that all taxpayers meet their tax obligations. In general, the ATO is looking for inconsistencies and errors in your tax return, including:
- Overstating expenses: claiming expenses that are not directly related to your business or claiming personal expenses as business expenses.
- Under-reporting income: failing to report all income earned by your business, including cash payments and income from overseas.
- Poor record keeping: not keeping thorough records of all annual income and expenses.
- Invalid deductions: claiming deductions that are not allowed or claiming too much.
- Non-compliance with tax laws: failing to meet your tax obligations, such as failing to lodge tax returns or pay the correct amount of tax.
The ATO also uses data matching and other techniques to identify potential non-compliance by small businesses. For example, the ATO may compare your tax return to data from banks, financial institutions, and other government agencies to identify discrepancies.
According to the latest statistics from the ATO, small businesses are more likely to be audited than individuals, with a 9.3% audit rate for businesses compared to a 1% audit rate for individuals in 2020-21. However, most small business audits (79%) are conducted remotely, without an on-site visit.
To avoid an audit and ensure that your small business tax return is accurate and complete, it's essential to keep thorough records of all income and expenses, use a reputable accounting and tax software like Thriday, and seek professional advice if you're unsure about any aspect of your tax obligations.
When Do You Get a Tax Refund?
If your small business tax return shows that you have overpaid your tax for the year, you will be entitled to a tax refund – win! The ATO generally processes tax refunds within two weeks of receiving your tax return, provided that you have lodged your return by the deadline and there are no issues with your return.
However, if your tax return is more complex, it may take longer for the ATO to process your refund. Additionally, if you have a tax debt or other outstanding obligations, the ATO may use your refund to offset these amounts, which could delay your refund.
According to the ATO, the average tax refund for small businesses in Australia was $4,811 in the 2020-21 financial year. However, the amount of your tax refund will depend on various factors, including your business profit, deductions claimed, and tax withheld throughout the year.
How Do I Pay Back a Business Tax Return Debt?
If your small business tax return shows that you owe tax, you must pay the amount owing by the due date to avoid interest and penalties. The ATO offers several payment options: online payments, payment plans, and electronic funds transfers.
One way to pay your tax debt is through the ATO's online portal, which allows you to pay using a credit card or bank account. You can also set up a payment plan to pay off your debt in instalments over time but be aware that interest and penalties may still apply.
If you're having trouble paying your tax debt, you can contact the ATO to discuss your situation and arrange a payment plan that suits your needs. The ATO also offers assistance for businesses experiencing financial hardship or other difficulties.
Summary of ATO Key Business Tax Return Dates and Steps
As a small business owner, it's important to know the key tax dates and steps involved in lodging your business tax return. Here's a quick summary:
- End of financial year: 30 June 2023 is the cutoff date for calculating your business profit and losses, which will determine your tax obligations for the year.
- Tax return lodgment due date: 31 October 2023 is the due date for lodging your tax return as a sole trader, partnership or trust. 28 February 2024 is the due date for companies. Both deadlines can be extended if you use a registered tax agent.
- Payment due date: If you owe tax, it must be paid by the lodgment due date to avoid interest and penalties. The due date will be provided on your Notice of Assessment.
- Tax refund: If you're entitled to a tax refund, it will typically be processed within two to three weeks of lodging your tax return.
- ATO audit: The ATO may audit your business tax return at any time, so keeping accurate records and following the ATO's guidelines is critical.
Business Tax Return FAQs
What documents do I need to prepare my business tax return?
You must gather financial documents such as income statements, balance sheets, and bank statements. You may also need to provide documentation for expenses, such as receipts, invoices, and payroll records. If you are using Thriday, everything will be automatically prepared.
Can I prepare my business tax return?
Preparing your business tax return is possible, but it can be complex and time-consuming, especially if you have a large or complicated business. Many businesses hire a professional accountant or use automated accounting software like Thriday.
What deductions can I take on my business tax return?
The deductions you can take on your business tax return will depend on your business expenses and structure. Common deductions include costs for advertising, travel, office supplies, and employee wages. You may also be eligible for deductions for certain types of equipment purchases, research and development expenses, and charitable contributions.
What happens if I need to correct my business tax return?
If you make a mistake on your business tax return, you may need to file an amended return to correct the error. Depending on the nature of the mistake, you may also face penalties or interest charges from the tax authority. It's important to carefully review your return before filing and to seek professional help if you're unsure about any aspect of the filing process.
Lodging your small business tax return takes time and preparation, but it can be smooth and stress-free with the right tools. Thriday's accounting and tax software can help you stay organised and on top of your tax obligations throughout the year, making it easier to lodge your tax return when it's due. Remember to keep accurate records, stay informed of key tax dates and steps, and seek professional advice. By taking these steps, you can ensure that your small business tax return is lodged on time and in compliance with the ATO's guidelines so you can get back to growing your business without a care in the world.