How to lodge a business tax return
Step 1: Consider your business structure
As a sole trader, you need to lodge your personal income tax return, even if your business income is below the tax-free threshold. Your personal tax return should include your business income and all other forms of personal income, less any deductions you’re eligible for.
Each member of a partnership pays individual taxes on their share of partnership earnings. The partnership itself doesn't pay business taxes, but you still need to lodge a business return under the partnership’s tax file number to declare the partnership’s income, deductible expenses and distribution of net income or loss between partners.
A company lodges a business tax return and pays tax on company income.
A trust must lodge an annual tax return; however, the tax payable is determined by how the trust’s income is distributed. If all trust income goes to adult resident beneficiaries, only these individuals pay tax, based on their trust earnings and other income declared in their personal tax returns.
Step 2: Review your business activity statements (BAS)
The ATO automatically sends BAS to any business that has registered for an Australian business number (ABN) and goods and services tax (GST). Most businesses lodge their BAS quarterly to report and pay their GST, pay as you go (PAYG) instalments, PAYG withholding and other taxes.
Your BAS includes information you’ll need when you lodge your company tax return. Therefore, it’s important to review it for accuracy before filing. You can also correct BAS mistakes or make adjustments, as necessary.
Step 3: Gather relevant business records
You may need several types of business records to lodge your taxes, such as:
Receipts for purchases
Paperwork for any sales that trigger capital gains tax
Records for passive income
Statements for any interest you’ve earned
Employee payroll records
Statements for any stock shares or trust disbursements.
The ATO currently requires businesses to keep records for 5 years (in most cases) from the date you lodge your tax return. Therefore, it’s extremely important to have a robust recordkeeping system in place.
Step 4: Claim allowable tax deductions
A tax deduction is an eligible business expense you can claim to lower your taxable income and reduce the amount of tax you pay each financial year. If you’ve been keeping good records, you’ll have the tax receipts you need to claim deductions on your small business tax return.
Step 5: Report all employee tax and super contributions
For many businesses with employees, using payroll software to automatically calculate and report on payroll taxes, PAYG withholding and super contributions makes regulatory compliance and tax time so much more straightforward.
Step 6: Lodge your tax return and BAS by the deadline
Determine your tax lodgement date and file well in advance of the deadline. If you’re unable to finish your taxes on time, you may be able to request a deferral. But deferring your lodgement date doesn’t defer your payment date — you’ll need a registered agent to help you if you can’t pay your taxes.
If a tax agent requests a payment deferral on your behalf and the ATO approves that request, payment will be due on your deferred lodgement date.
You may lodge your taxes by mail, digitally via myTax, or through a registered agent.
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With the right accounting software, you can make tax time as easy as possible. Whether you want to lodge your business tax return yourself or share your financial information with your accountant or bookkeeper, you’ll have everything you need at your fingertips. With automated reporting built into the software for PAYG, GST and BAS, you can spend your time working on your business and not on gathering paperwork.
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