Easy ways for your Small Business to Stay ahead at Tax Time.

As an employee in a business, often there are perks that can come with the job. A company car, fuel money, perhaps some technology to help make things easier. Small business owners however have to be a lot more mindful of how they use the money from their business.

Any money or assets that a business has earned or possesses, is solely the property of that business. That means that there are numerous issues that can arise from dipping into these company funds.

As a business owner, it’s important to keep records and correctly report transactions if using company money or assets (e.g, company car). These can include instances such as

• taking money out of your company for yourself or your family
• receiving money from it (for example, as a director, shareholder or an associate)
• using your company’s assets for private purposes.

For small businesses, this can be easily done through:

• Salary, wages or director’s fees
• Repayments of a loan you have previously made to the company
• A fringe benefit, such as an employee using a company car
• Dividends (formal distribution of the profits)
• A loan from the company

If a business does not report correctly or keep appropriate records for transactions, an unfranked deemed dividend could be included in their assessable income (this is a bad thing) during tax time.

Here are some easy ways to avoid being put into this situation:

• Always ensure that any company money issued is accounted for as per the previous categories.
• Have a separate bank account for the company to pay for company expenses (not private ones!)
• Keep proper records of all company transactions
• Repay any loans from the company before the tax return date to avoid unwanted income tax

https://iorder.com.au/publication/Download.aspx?ProdID=75273-07.2020

Posted on 19 March '21 by admin, under tax.