Top 5 Business Tax deductions

When you are a business owner you are always looking for opportunities to save money on your taxes, for this reason this article will help you with the Top 5 Business Tax Deductions. If you are starting a business as a small business owner or if you have been in business for a long time this article is for you.

Let’s start with what are tax deductions? 

Tax deductions are business expenses that can lower the amount of tax you have to pay. There are three golden rules you need to meet to claim a deduction for work related expenses:

  1. You must have spent the money and you weren’t reimbursed.
  2. The expense must directly relate to earning your income.
  3. You must have a record to prove it, usually a receipt.

Top 5 Tax  deductions Business can claim

  1. Motor vehicle expenses: You may be able to claim a deduction for motor vehicle expenses, if you: 
  • Use your car to perform your work duties
  • Attend work- related conferences or meetings away from your normal workplace
  • Travel directly between two separate place of employment
  • Travel from your normal workplace to an alternative workplace and back to your normal workplace 
  •  Travel from your home to an alternative workplace and then to your normal workplace.

You can calculate your car expenses in two ways

2. Business travel expenses: the general rule is that you can claim deductions for expenses if you or your employee are traveling for business purposes.

Expenses you can claim include:

  • airfares
  • train, tram, bus, taxi, or ride-sourcing fares
  • car hire fees and the costs you incur (example fuel, tolls and car parking) when using a hire car for business purposes
  • accommodation
  • meals, if you are away overnight.

To claim expenses for overnight travel, you must have a permanent home elsewhere and your business must require you to stay away from home overnight. If you are entitled to goods and services tax (GST) input tax credits, you must claim your deduction in your income tax return at the GST exclusive amount

3. Repairs, maintenance and replacement expenses: 

Expenses you can claim include:

  • painting
  • conditioning gutters
  • maintaining plumbing
  • repairing electrical appliances
  • mending leaks
  • replacing broken parts of fences or broken glass in windows
  • repairing machinery.

  • 4. Operating expenses: expenses you incur in the everyday running of your business. Make sure you keep accurate and complete records of these expenses

General expenses:

  • ​​purchases of trading stock, including delivery charges
  • advertising and sponsorship
  • public relations
  • legal expenses, such as those incurred defending future earnings, borrowing money, discharging a mortgage or obtaining tax advice
  • tender costs, even if the tender is unsuccessful
  • bad debts
  • bank fees and charges
  • insurance premiums, including accident or disability, fire, burglary, professional indemnity, public risk, motor vehicle, loss of profits insurance, or workers compensation
  • internet service provider fees
  • subscription fees for off-the-shelf software
  • transport and freight
  • waste removal and recycling
  • parking fees (but not parking fines)
  • small-value items costing $100 or less

5. Tax-related operating expenses: include

  • registered tax agent and accountant fees
  • tax-related expenses, such as: having a bookkeeper prepare your business records, preparing and lodging tax returns and activity statements, objecting to or appealing against your assessment, attending an ATO audit, obtaining tax advice about your business, credit card/charge card payment fee associated with paying a business tax liability, for example, GST liability. 

Are you ready to learn more about business tax deductions in Australia? Contact us we can guide you through:  https://ysaccounting.com.au/

Tips to improve your cash flow?

To begin we can define cash flow as the movement of money in and out of a business, so when we speak that  there is a positive cash flow it  means businesses have more cash coming into the bank than they’re spending.

Why is a cash flow forecast important?
Cash flow statements show the net change in your company’s cash position from one period to the next, that’s why based on what your cash flow statements reveal, you might need to cut expenses or increase the cas

Tips to improve your cash flow

  1. Ensure you know your target market and potential customers within that market: A more focused target market results in less marketing expenditure
     It’s critical to keep your records up-to-date and monitor them regularly. Make sure all your invoices and payments are entered weekly into your financial system.
  2. Understand what problems your product or services solves for your customer
  3. Keep your marketing regular
  4. Keep a database of your customers
  5. Invoice quickly: deliver products as soon as they’re ready, and invoice when the sale is completed
  6. Request a deposit: For special or large orders
  7. Follow up outstanding payments regularly
  8. Get smart digital products to help you cash flow forecast
  9. Control spending: control costs and keep hold of your cash
  10. Monitor stock levels: track the movement of your stock and have processes in place to identify when new stock should be ordered.
  11. Reward staff behavior that improves cash flow: such as setting sales targets, reducing expenditure or paying commission on collection of payment from customer.
  12. Sell unnecessary assets: this action increases cash in the business and saves on costs, such as insurance and storage.

If you need  business advice contact us: www.ysaccounting.com.au

Four warning signs your business is in trouble:

1. Inability to pay your debts: 
Think about ways you could increase cash flow, such as: preparing weekly cash flow forecasts to understand what has to be paid, having solid procedures in place for collecting outstanding debts from customers, talking to your bank about putting a temporary loan in place

2. Poor profitability: 
Start to monitor profit, identify issues regularly and consider areas such as: gross and net margins, sales, review the productivity of your staff.

3. Inadequate financial records:
 It’s critical to keep your records up-to-date and monitor them regularly. Make sure all your invoices and payments are entered weekly into your financial system.

4. Continually replacing staff: 
Think about ways to reduce staff turnover.

Get your business back on track: finding a good bookkeeper or accountant and ask them what key financial areas should be reviewed regularly. Contact us: www.ysaccounting.com.au