29 May 2023
Your guide to business tax returns
As the upcoming tax season rapidly approaches, we understand that navigating the process of lodging a tax return for your business can be overwhelming. That’s why we have prepared this comprehensive blog to guide you every step of the way. At Ipsum, we’re passionate about providing the knowledge and support you need to feel confident about your business finances. Read on to learn more about how to lodge your business tax return this year.
1. Learn the tax return requirements for your business type.
The first step to filing your tax return is to understand the requirements for your business structure.
- Sole trader: As a sole trader, you will need to lodge an individual tax return and include your business income using a separate business schedule. There is no need to file a separate tax return for your business. Read our guide to individual tax returns for more information.
- Partnership: If you’re part of a partnership, there are a few important things to keep in mind. Firstly, your partnership has its own tax file number (TFN), but it does not pay income tax on the profit it earns. Instead, each partner is responsible for reporting their individual share of the partnership income in their own tax return. Additionally, it’s essential for your partnership to lodge a separate partnership return under the partnership TFN.
- Company: A company is a separate legal entity meaning that you must lodge a company tax return and pay tax on the company’s income. And, if you’re a director of the company, you must also lodge your own personal return.
- Trust: If your business is structured as a trust, your trust will have its own TFN that you need to use to lodge your tax return.
2. Understand your Business Activity Statements (BAS) requirements.
When you register for an Australian Business Number (ABN) and Goods and Services Tax (GST), you will automatically receive a Business Activity Statement (BAS) from the ATO. Your BAS will help you report and pay various taxes, such as GST, luxury car tax, wine equalisation tax, PAYG withholding, PAYG instalments, and fringe benefits tax (FBT). There are multiple options for paying your BAS, including using BPAY, credit and debit cards and online. Just make sure that you are aware of your deadlines because late payments incur interest charges.
3. Know your deadlines and lodge your taxes.
Now that you know your tax obligations, the next step is to keep track of what to do, when. Different deadlines apply based on your business structure and whether you use a registered tax agent. Be sure to note down the following dates in your calendar to lodge your taxes:
- Sole traders, partnerships, and trusts: Tax returns are due by the 31st of October unless lodged through a registered tax agent.
- Companies: If you prepare your company tax return, you will generally have until the 28th of February. If you lodge through a registered tax agent, they will tell you when they will lodge your tax return.
- BAS due dates vary depending on your circumstances: quarterly if your GST turnover is less than $20 million, monthly if your GST is $20 million or more, and annually if you are voluntarily registered for GST and your turnover remains under $75,000 ($150,000 for not-for-profit bodies).
If you’re a sole trader you can lodge online with myTax (MyGov), depending on how complicated your tax return is, as well as your own personal preferences. If you’re a company, trust or partnership the Tax office recommends you lodge via a tax agent (like Ipsum).
4. Pay your taxes… on-time!
When it comes to paying your taxes, the ATO has several online services and self-service tools you can use to help manage your tax. You can pay your taxes using BPAY or a credit/debit card. If you’re concerned about meeting lodgement or payment deadlines, you should contact the ATO for guidance.
5. Seek advice.
If you are still feeling apprehensive about your business tax return, it might be wise to seek professional advice and personalised support. Don’t hesitate to reach out for help. At Ipsum, we are dedicated to empowering you with financial confidence, and we are happy to assist you in easing the pressure during this tax season. Give us a call on 03 5442 2966 or email hello@ipsumadvisors.com.au to get the ball rolling.
This is general advice only and doesn’t take into account your financial circumstances, needs and objectives. Before making any decision based on this information you should assess your own circumstances or seek advice from your financial advisor and seek tax advice from your accountants at Ipsum Advisors. Information is current at the date of issue and may change.