What small business isn’t on the lookout for money-saving tips – especially at tax time? While looking for ways to legitimately make tax savings can be a challenge, it is possible. Here are five ways to save money and reduce your tax bill this financial year.
1. Get the best deals
It can be very easy to go about your day-to-day business without thinking twice about your regular expenses. However, giving your bills a once-over to see where you can potentially save money, can really pay-off in the long run. Call up your regular suppliers and see if you can negotiate a better deal – if not, shop around and go with a competitor who is offering a more enticing deal. The start of a new financial year is the perfect time to cast an eye over your expenses for the previous year and see where you can cut costs moving forward.
2. Claim tax deductions
Tax deductions can help small businesses save real dollars. From home office expenses, to travel, education or simply ongoing expenses related to your business, these deductions can save small businesses serious dollars when it comes to tax time. There are so many different deductions that it can be hard to understand exactly what you can and can’t claim. It’s worth getting an accountant on board to correctly calculate all the deductions you are eligible for – just remember to save those receipts!
3. Keep track of your travel
Claiming for business-related travel expenses is a simple way to save on tax. This includes public transport costs, or the costs associated with using your own car to get to meetings or jobsites. You can claim part of the cost of your vehicle expenses using the cents-per-kilometre method if you travel less than 5,000km each year. Any more than that and you’ll need to keep a logbook.
Fortunately, there are tools you can use to track your mileage, such as QuickBooks Online, which automatically records all your trips via your smartphone’s GPS. After each trip, all you need to do is categorise the trip as business or personal. You can also use it to snap and store travel receipts on the go, such as fuel, services and registration.
4. Use independent contractors
If you need help with a specific short-term task, it’s a good idea to hire an independent contractor over a permanent employee. As well as lowering the overheads associated with hiring a full-time employee – company benefits, annual leave, sick pay, superannuation – you’ll also avoid the cost of additional employment taxes. Payroll tax is one (unless it’s considered a ‘relevant contract’) and fringe benefits tax (FBT), which applies to perks such company cars, parking, and low interest loans, is another.
5. Utilise the latest technology
Taking advantage of smart new technologies will not only save you time, but it could save you money at tax time. From project management tools, to accounting software and artificial intelligence (AI) technology, there’s a tool to help with almost every business function and, because they support your business’s operation, they’re tax deductible.