If you’re managing your own business, you’re probably familiar with the stress and organisation that goes into it. However, handling taxation rules and regulations can add another layer of complexity to your already stressful workload.
If you accidentally miss a deadline or file your taxes incorrectly, you could be at risk of expensive penalties and fines. This is why understanding the financial year and meeting its obligations on time is crucial to your business success.
In this article, we’ll provide the key information you need to understand the financial year and its expectations. Likewise, we’ll offer valuable advice and guidance on managing your end-of-year financial obligations so you can stay on top.
For personalised advice from a Business accountant Melbourne businesses trust for accounting and financial planning, contact our team at Curve Accountants today.
The Financial Year Explained
Unlike our regular calendar, the end of the financial year does not align with the end of our actual year. Instead, the financial year runs from July to the end of June in the following year.
Specifically, the financial year begins on the 1st of July and finishes on the 30th of June. While it’s important to keep track of your finances through the fiscal year, there is another important window you’ll need to keep in mind.
From the start of July 1st to the 31st of October, businesses must submit their tax returns to the Australian Taxation Office (ATO). This allows them time to calculate your tax obligations.
What is a Tax Return?
A tax return is a statement that lists your income and expenses during the financial year. It should not list any information from previous years, as this could open you up to fines.
Your tax return will then be used to calculate how much tax you’ve paid. It will then calculate how much you owe. If you have paid more than your share, the ATO will provide a tax refund. If you have paid less, you will have to cover the gap.
What do I Need for a Tax Return?
To prepare for your tax return, you should collect all of your financial records, which include:
- Business Identification Details: You will need your ABN, TFN, GST registration status, and other details such as your address and your business structure.
- Income: Total income, including interest, grants, or rebates.
- Expenses: Purchases, operating expenses, salaries, and superannuation contributions.
- Assets and Liabilities: You’ll need records of your stock on hand, asset acquisitions, loans, and debts.
Tax Returns and Your Business
Depending on the type or structure of business you run, you may have to submit a different type of tax return. For instance, self-employed and sole traders are in a different category from a company.
Self-employed and Sole Traders
Self-employed and sole traders are fairly self-explanatory. This refers to any person who is the sole owner or operator of their business. To set up your business for tax as a sole trader, you simply have to have your own Tax File Number along with an Australian Business Number.
If you exceed $75,000 in annual turnover, you must also be registered for GST. Once ready, you’ll have to submit your tax return to the ATO.
Companies
A company refers to a business structure that is kept separate from the owners. Companies usually require more reporting and legal obligations than sole traders, which can make their taxes far more complex.
A company must also be registered for GST if it exceeds $75,000 in annual turnover. However, they are also required to register with the Australian Securities and Investments Commission.
Companies must lodge a separate company tax return at the end of every financial year. Directors, or those submitting this return, must also submit an individual tax return that reports their earnings from company wages, shares and dividends.
Rather than the ATO, company tax returns can be submitted through SBR-enabled software with a registered tax agent. Further, unlike other tax returns, company tax returns are usually submitted by the 28th of February each year.
File Your Taxes The Right Way
Taxes can quickly become complicated, especially if you’re not sure what type of business structure you have or where your financial documents may be. But expert help can make all the difference.
A qualified accountant knows how to navigate any legal and tax requirements your business may face. This can not only help you stay on top of your obligations, but potentially even help you avoid paying more tax than you need to.
This kind of advantage can go a long way to supporting your business’s long-term success. At Curve Accountants, we have the experience you need. Whether you need a Business accountant Sandringham or in Melbourne, we have you covered.
With a passion for details, we’ll make sure you stay ahead of the taxation game. Reach out to our staff today and put your business in the right hands.
