Your tax obligations as a business owner are dependent on various factors such as the business structure, income and business activities. Learn everything you need to know about small business tax in this guide.
Can anyone share their thoughts on the ways in which tax accountants can help small business owners save on their tax bill and find other ways to cut costs across the business?
Very good question! Let’s face it, we’ve all been there thinking we can save money by handling tax ourselves. It’s easy to overlook the benefits of hiring an accountant when you see the costs quickly adding up, but from experience, tax accountants are worth their weight in gold. Navigating tax as a small business owner can seem like a minefield and there are so many deductions, offsets and tax minimisation strategies that many people are unaware of. Unless you have extensive knowledge of tax regulations or have the time and headspace to sit down and go through your books with a fine toothcomb, you may be paying a much higher tax rate or have a considerably smaller tax refund than what are eligible for. It’s also worth thinking about the time it would take you to prepare your tax return forms and documents. This is time that could be reinvested in your business by meeting clients, spending time in your shop or working on other projects.
As well as helping you claim all eligible expenses and maximising your refund, tax accountants can help you develop tax minimisation strategies throughout the year to reduce your tax liability. The problem of doing this yourself is that you run the risk of implementing unlawful strategies that could get you in trouble with the ATO. Tax accountants are experts in building tax planning within the law and can help you review your operating costs, assets and investments to find ways to save or reinvest money. They can also determine the financial risk of your cashflow and any capital investments you have and how to best protect them.
Here are a few extra ways tax accountants can help your small business:
Stay up to date with the latest tax regulations
Lodge your tax returns correctly and on time to avoid penalties and fines from the ATO
Tax accountants have extended deadlines which gives you more time to prepare your documents
Get advice and representation if you are audited by the ATO
Hope this helps!
Does anyone know how much accountants charge to do your taxes?
This is a common question among business owner and the answer is… it really depends! Different accountants have different fee structures and some may charge you by the hour for tax preparation and lodgment while others will charge a fixed fee. If you have an ongoing monthly retainer your accountant may either include your tax return as part of your monthly accounting package or charge an additional fee.
From experience, accountants usually charge an hourly rate of $75 to $300+ depending on their expertise. For sole traders and small businesses with a relatively straightforward tax situation, the starting price to hire an accountant to prepare and lodge your income tax return is around $250-$300. For companies or businesses with a more complex tax situation, prices start from $1,000. As a rule of thumb, accounting fees are generally more expensive the more complicated your tax return is.
The prices mentioned above are for income tax returns only and don’t include BAS statements or tax planning. These services are usually charged separately or as part of an accounting/tax package.
Hope this helps!
What is the average cost of a tax return package for small businesses?
Excellent question. Tax return packages are a good option if you want to ensure your tax return is completed currently and on time. It can lessen some of the stress of tax season and help you maximise your tax return. To give you a bit of an idea, here is a list of different tax return packages and prices for sole trader and small business tax returns that I’ve gathered from my research:
DIY tax return prices start from $79 (includes a review of your application by a tax agent to maximise your return)
Online tax agent service starts from $299 (a tax agent takes care of the entire process and prepares and lodges your tax return for you)
Business tax returns start from $189.60
Company tax return packages start from $500 + GST
Sole trader packages start from $350 + GST
Ezy Tax Online
Company tax return/trust tax return starts from $450
Partnership tax return starts from $340
GST registered sole trader tax return starts from $240
Uber and rideshare business tax return starts from $240
*Note that the above prices for Ezy Tax services also include a financial report.
Individual tax return with one rental property and/or small business starts from $199 including GST (there is an additional fee of $100 for every additional rental property or small business activity you have)
Sole trader tax return with financials starts from $480 + GST
Company, trust and partnership online tax return preparation starts from $180 + GST
Basic tax reporting for a company or trust tax return starts from $400 + GST
Hiring an accountant
The cost to hire an accountant for a sole trader tax return ranges between $300 to $500
Company tax returns typically range between $1,000 and $3,500
Hope this helps!
How much does it typically cost to lodge a business tax return with H&R Block?
Good question! The cost of filing a business tax return with H&R Block is pretty reasonable. There are two options: DIY online or pay a bit more and get an online tax agent to do it for you.
If you go for the DIY option, you will complete your tax return online and an H&R Block tax expert will review it to help you maximise your tax refund. This option starts from $79 for sole traders and investment property owners.
If you decide to lodge your tax return online with an expert, a tax agent will prepare and submit your tax return on your behalf. This way, you can ensure you haven’t missed any tax deductions or offsets. They’ll ask you to review it and once you give the green light they will submit it to the ATO. The cost of this service starts from $299 for sole trader and partnership businesses.
There are over 400 H&R Block offices dotted around the country and tax return prices may vary by office location. It may cost you a bit more in metro areas than it would in regional locations. You can find and contact your local H&R Block office to find out exactly how much it will cost: https://www.hrblock.com.au/locator.
Have you used H&R Block for your business tax returns? Would you recommend it?
Great question! I’ve not filed a tax return for my sole trader business with H&R Block, but I’ve heard pretty good things. It is one of Australia’s most popular tax accountancy companies for individuals and businesses and has been around for over 50 years now. From what I’ve gathered, it’s a trusted company and their services are reasonably priced. From my research, some of the top benefits of lodging your tax return with H&R Block include:
The service is online which makes the process of filing your tax return easier and more efficient
They have a maximum refund guarantee and if you happen to find that you’re entitled to a bigger tax return they will refund your preparation fee and lodge an amendment with the ATO
I would be really interested in learning if any other business owners have lodged a small business tax return with H&R Block and whether you had a good experience? With tax season approaching, I’m currently trying to weigh up whether to hire an accountant or go for an online service like H&R Block.
Is GST added to Facebook advertising costs and can I claim any tax back If I promote my business with Facebook ads?
As of changes made to Australian tax law in August 2018, Facebook Ads purchases are subject to GST of 10%. As stated by Facebook, “This applies to advertisers whose 'Sold to' country on their business or personal address is set to Australia and who haven't added their Australian business number (ABN) to their Facebook ad account. If you're running ads for business purposes, Facebook is required to confirm your GST registration through your ABN.
Facebook has advised on their website that if you add your Australian Business Number (ABN) to your Facebook Ads profile, you will not be charged GST on your advertising invoice. For clarification, this is the statement provided by Facebook:
“In the Ad accounts settings of Ads Manager, you can add your ABN so it shows up on your ads receipts. If you add your ABN to your account, Facebook doesn't add GST to your purchase of Facebook ads.”
Check out Facebook’s help article for more information: https://www.facebook.com/business/help/312056985996758?id=287849115238870
Does anyone know you can claim all types of marketing expenses on your tax return, or are there limitations as to what is tax deductible?
Marketing is an essential part of building your brand, attracting customers and sustaining your business. This is why the ATO allows you to claim marketing expenses in your income tax return as they are costs you incur to run your business. Some examples of tax deductible marketing expenses include:
Costs associated with hiring a marketing consultant
Web design and development costs
Domain registration and web hosting fees
Digital advertising costs
Social media advertising costs
Offline advertising e.g. TV, print, radio ad campaigns costs
Costs associated with developing and implementing organic strategies e.g. SEO, SEM
To claim marketing/advertising expenses (and all other eligible tax deductions), make sure you keep all receipts, invoices and records of your marketing expenses. You'll need these to evidence your claims. Not all marketing expenses are eligible (such as business vehicle signage) so check the ATO’s guidelines or hire a tax accountant or tax agent for professional advice. Tax agents and accountants can help you maximise your tax return and get the best possible refund.