Do you operate your business mainly from your home?
Whether you’re operating a business from home or at an alternate location, such as an office or co-working space, keeping accurate records for tax purposes is essential. The primary method of proving your business transactions is through receipts. Here’s why – If you operate your business from home, you must complete a business activity statement (BAS) each year.
Ensure any receipts you receive or produce include essential information such as your business name, ABN, payee’s name and address, payment period or date, total payment, total tax withheld, and payee’s ABN or TFN if known.
If you employ contractors or suppliers, keep detailed records of contracts and payments to claim all relevant tax deductions. You may also need to lodge a Taxable Payments Annual Report (TPAR) with the ATO by August 28 each year.
The ATO requires businesses to keep records of all transactions and receipts for five years from lodging the relevant tax return. It’s important to note that different rules apply when the five-year period starts, depending on factors such as Fringe Benefits Tax (FBT), super contributions, and employee choice super funds.
Consider using digital tools to streamline your business operations and keep track of your administration. Be vigilant in checking for mistakes in calculations to avoid larger issues in the future. Keep a separate account for tax and superannuation to avoid scrambling for money come tax time.
Finally, keep personal expenses separate from business expenses, as only work-related expenses can be claimed as a tax deduction. Calculate and claim only the business portion if an expense is part business and part personal. By following these guidelines, you can ensure your home-based business stays on top of its tax obligations.
So, take the time to establish good record-keeping practices, and seek the advice of a registered BAS agent if you need clarification on any aspect of your tax obligations. With Katia Chehade‘s help, you can ensure your business fully complies with all tax laws and regulations.