How to Lodge a Business Tax Return
Tax time does not need to be dreaded by business owners. While a significant amount of effort goes into preparing a business tax return, and many simply leave this task for their business accountant, this six-step guide can help you lodge your business tax returns.
How to Lodge a Business Tax Return
- Do your return based on your business structure
- Go over your Business Activity Statement (BAS)
- Collect vital business records you will need
- Claim all of your tax deductions
- Report all employee tax and super contributions
- Prepare ahead of time
1. Do Your Return Based on Your Business Structure
For example, a sole trader must file a single tax refund. This can be filed electronically, or you can file a paper tax return and mail it to the ATO. All other types of businesses (partnership, company, and trust) can submit using Standard Business Reporting (SBR) enabled software or complete a paper tax return and mail it to the ATO.
2. Go Over Your Business Activity Statement (BAS)
The majority of companies lodge their BAS quarterly and pay the PAYG, GST, and other taxes. This statement contains vital information you will need when you lodge your business tax returns, and it is sent to you by the ATO. Be sure to check for errors!
3. Collect Vital Business Records You Will Need to Lodge Your Return
What you need may vary, but generally, companies need:
- Employee payroll records
- Paperwork for any sales that trigger capital gains tax
- Passive income records
- Statements showing earned interest
- Statements covering stock shares or trust disbursements
4. Claim All of Your Tax Deductions
Understanding what deductions you can claim can help you save a significant amount on your tax. Keeping excellent records will make this task much more manageable.
5. Report All of Your Employee Tax and Super Contributions
Many businesses rely on payroll software to keep this step as simple as possible. However, if you do not use payroll software, you will need to be scrupulous with your record-keeping to accurately report these amounts. Give yourself plenty of time to prepare this.
6. Prepare Ahead of Time
Remember to check the deadline for your business taxes and BAS and be ready. It is permissible to ask for a deferral, but this does not pause any payments that are due. It may be possible to get a payment deferral, but this typically requires the assistance of a registered tax agent.
Can You Lodge Your Own Business Tax?
Regardless of your company’s structure, you can lodge your business tax. Sole Traders can file a single individual tax refund either using the ATO myTax portal or by completing a paper tax return and mailing it to the ATO.
All other business structures can lodge their taxes by using Standard Business Reporting-enabled software or by completing a paper tax return and mailing it to the ATO.
Another option a large number of businesses choose is to enlist the services of a registered tax agent.
What Will Trigger an ATO Audit?
All Australian tax returns go through 20 computer checks before being accepted as correct. With so many checkpoints, it is easy to see how audits can happen if one significant mistake occurs. However, not all of the 2 million audits by the ATO happen because of simple numeric errors.
Issues with priority areas and potential audit triggers often bring about many audits. The ATO always announces where they will be focusing. For example, last year, they focused on record keeping, business expense reporting, and Cryptocurrency gains. Any return red-flagged for one of those reasons stood a great chance of being audited.
Additionally, the ATO looks for tax fraud when determining whether or not to audit you.
Examples of tax fraud include:
- Attempting to use GST through falsified business activities
- Gaining access to a Superannuation fund via the use of fraudulent documents
- Lodging fake claims or tax offsets
- Purposefully making false statements to the ATO
- Showing payment summaries or false income statements
- Submitting a fake tax return using a fake or stolen identity
Even though lodging your business taxes is acceptable, there are several things to consider before taking on the task. Your taxes may take more time and effort than you can expend, and there is no room for error. The fact that there is a great deal riding on your taxes being impeccably done and the potential for an audit from the ATO is at the top of the list of reasons to hire a professional.
If you need a skilled and experienced group of experts to handle your taxes, feel free to contact us.
The information provided in this post is for informational use only. It is not considered legally binding financial or tax advice and should not take the place of a consultation with a tax or financial professional.
Do I need to lodge a tax return for my business?
Yes, your business needs to lodge a tax return each year, even if you record a loss or don’t meet the tax threshold.
What do I need to report in my tax return?
What you need to report and how you lodge your annual tax return for your business depends on your type of business entity. For example, if you operate your business as a sole trader, you need to include all your business income on your individual tax return using a separate business schedule. For a specific answer, contact the ATO directly or ask a registered tax agent.
What if my business hasn’t earned any income?
You still need to lodge a tax return if you carried on a business, even if your business hasn’t earned any income.
When do I need to lodge my tax return?
The due date for lodging your tax return depends on your business structure. For example, if you’re a sole trader, the due date is usually 31 October. For a specific answer, contact the ATO directly or ask a registered tax agent.
How do I lodge my tax return?
You can lodge your tax return yourself online using the Business Portal, or through a registered tax agent.
What if I make a mistake on my tax return?
If you make a mistake on your tax return, you can amend it by lodging a revised tax return. For guidance, contact the ATO directly or get in touch with a registered tax agent.
What if I can’t pay my tax bill?
If you can’t pay your tax bill on time, you should contact the ATO as soon as possible to discuss your options.
What if I need more time to lodge my tax return?
If you need more time to lodge your tax return, you can apply for an extension of time. For guidance relating to this process, contact the ATO directly or ask a registered tax agent.
What if I need help with my tax return?
You can get help with your tax return from a registered tax agent or from the ATO’s website.
What if I have other questions about business tax?
If you have other questions about business tax, you can contact the ATO or consult with a registered tax agent.