9 ways for small business owners to keep the taxman happy
When Benjamin Franklin said that the only things certain in life were “death and taxes” most people didn’t consider that they may be closely linked.
But problems with taxes can lead to the death of your small business unless you take steps to keep the taxman off your back.
With sales meetings, recruitment, salaries, cashflow issues, marketing, suppliers, and a whole string of other things for small business owners to worry about, there’s no need to add the taxman to the list.
A robust financial system that keeps the tax authorities happy should be the foundation that underpins your business - allowing you to focus on the multitude of other issues that require your attention.
The specific requirements set out by your tax authority will differ by location but many of the basics remain the same wherever you are.
And most authorities are currently tightening the rules and clamping down on tax cheats and tax avoidance.
Nine of the most important general guidelines are detailed below: wherever you’re located, whatever your business size, and whatever industry you’re in, these will help you identify red flags in your tax setup:
1. Understand all the tax requirements - or find someone who does
Do you think your tax affairs are simple? They’re probably not. Ninety-nine percent of small business owners don’t fully understand tax legislation - so it’s important to seek specialist help.
The temptation a business owner is to try to look after everything yourself. With tax, this can be a false economy: not only can it take ages to get to grips with what you need to do; it’s likely that you’ll miss something important. And the taxman will be on your back!
2. File returns on time
The general rule is to file tax returns within twelve months of the end of your accounting period but this may vary with location.
Good planning in your business will ensure that you’re ready for the process; you know when it’s coming, have scheduled time to do it each year, and don’t end up scrambling around at the last minute to avoid penalties.
3. Keep consistent & accurate records
You should already understand the importance of accuracy and consistency: quite apart from generating the management reports to make good business decisions, the tax authorities love you for it too.
Being consistent and accurate will help you flag any changes that affect your tax liability and explain any changes that raise questions from the tax authorities.
If you have some bookkeeping experience, you may be able to manage this yourself with user-friendly cloud software like Xero and Quickbooks Online. Otherwise, it’s best to have a certified bookkeeper or accountant keep your accounting records up to date.
4. Keep the ‘evidence’ together
Keep the receipts and invoices for business expenses together. Most business owners know they should do this but it’s surprising how many find themselves scrambling around looking for receipts when the time comes to do tax returns.
And even when they do find the receipts, they don’t know what they relate to.
Keep it organised. All tax authorities want to know that there is sufficient documentation to justify business expenses. Receipts don’t have legs. Your own inefficient system is responsible for losing them or causing confusion about their origin.
One of the benefits of using a cloud computing app such as Xero is the ability to take a photo of a receipt with your smartphone to ‘scan in’ an expense receipt straight into Xero; or you can use specialist apps that integrate with Xero such as Receipt Bank or Expensify.
5. File business & personal expenditure separately
It’s easy to confuse business and personal expenditure. Unfortunately, it’s one of the quickest ways to get offside with the tax authorities.
By keeping them separate, you can see at a glance what you can deduct and what you can't: that means two separate (probably electronic) filing systems. Don’t be tempted to think “I’ll sort them out when the time comes for my tax return”. You’ll forget or cause delays.
6. If you’re a cash-based business, take extra steps
For small business owners such as tradespeople, who often get paid in cash, take extra steps to keep things transparent. You can guarantee that you will be on the taxman’s radar at some point.
For income, keep additional records to back up bank deposit records, such as cash register printouts or manual records of daily sales that can be matched to the bank records.
One of the benefits of moving your accounting systems to the cloud, is the ability to do things faster and easier with paperless processes. For example, trades-based businesses can use apps like ServiceM8 to quote and invoice in the field and even take electronic payments on site.
If you’re thinking, “I prefer to be paid in cash,” the ‘cash economy’—where a business does not declare all its income in order to reduce profits and therefore tax—is not such a great idea. Your business will be more valuable when it comes time to sell it if you have always shown all your sales revenue ‘on the books’.
7. Create a clear policy for employee reimbursement
Tax auditors want to know that you’re following the regulations with regards to employee reimbursement for travel, mileage, personal expenses, etc. They also want to know that expenses are appropriately signed off within the business to indicate that the business accepts liability.
Document a clear policy that determines what employees can claim for and how they go about claiming it. Make sure that this is clearly communicated to all employees.
8. Plan for your tax bill
There’s no room for surprise tax bills on the path to success. Tax is generally predictable and consistent. This means that you can - and should - plan for it in advance.
Sit down with your tax professional, understand what’s coming and when, and create a fund that can be used to pay the bill when it arrives. Maybe lock away a set sum every month. That way there are no nasty surprises ahead.
9. Never avoid the letters
Just because your tax authority writes to you asking questions or requesting records, it doesn’t necessarily mean the worst. Never avoid or delay answering these questions, as they don’t go away.
Answer in a timely fashion - there will normally be an expected response date detailed on the letter. Don’t go beyond this.
Take some tax advice and answer the questions to the best of your abilities. Most tax issues can be solved relatively easily if they are dealt with before they spiral out of hand.
Don’t get caught out by non-compliance with tax or it can cost you and your business. Get the right tax advice from the start and follow the tips above to keep the taxman happy.
If you need any specialist tax advice for your business, contact one of our advisors to talk it through.
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It’s very common for retirement priorities to shift over time. But for some, the change arrives with a jolt. You may spend years—even decades—planning exactly what your post-work life will look like. While life can throw a curveball into your plans at any stage, the closer you get to retirement, the more unsettling the disruption can be. Whether it’s family breakdowns, the death of a loved one, an inheritance received, or unexpected expenses, you'll face a different personal and financial landscape. One that no longer matches the retirement you envisioned. Adjusting your working life. When a major life change hits, the most important rule is: don't rush anything. While you're reshaping your future and contemplating big moves, avoid making any rash decisions that are irreversible. The event may alter the required length of your working life or your willingness to continue working: Health issues could force you to retire earlier than planned A substantial inheritance might enable a more enjoyable, earlier exit from work. Conversely, a divorce late in life, particularly for someone with high spending habits, might necessitate staying chained to a desk longer. The separation may leave you with an unexpected mortgage or simply drain your finances through the legal process, creating difficulties. Make a basic plan. Take the time to sit down and rationally think through what your new retirement might involve. If retirement is still five to 10 years away, that's a good timeframe to start contemplating your next steps. The most critical step is to determine how much money you will need to spend. While most people worry about whether they "have enough money," the key question is almost always, "How much do I need to spend in retirement?". Consider this example: If you retire with $1 million and your annual spending requirement is $50,000, you're likely secure. However, if you have $1 million but need to spend $150,000 per year, you have a problem. You'll need to either dramatically increase your savings or significantly reduce your spending expectations. If you are struggling with these figures or want a professional opinion, see a financial adviser ( we can direct you to one ). Paying for a few hours of their time will help you consider things you hadn't thought about. A change of pace. Remember, retiring from your main career does not mean leaving the workforce for good. You have options: Moving part-time in your current job for a few years, using your extra days for hobbies. Taking on volunteer work. Leaving a stressful executive role for paid work you actually enjoy. Hopefully, your surprises on the path to retirement are positive ones. If they are not, don't panic. Stay calm and seek advice. We can help. Early advice and planning can make a real difference in managing your retirement well—understanding the tax implications is a huge part of that. Don’t wait — let us help you !
If you're living and working in Australia on a visa, you may be required to lodge a tax return with the Australian Taxation Office (ATO). Australia's tax system is complex—even more so if you're a visa holder. We specialise in helping visa holders understand and manage tax obligations with clarity, compliance, and confidence. With years of experience in this niche area, our dedicated team of tax professionals is here to make tax time stress-free. Do visa holders need to lodge a tax return? If you earn income in Australia, you're likely required to lodge a tax return. This applies even if you're on a temporary or bridging visa. Common visa types that often require a tax return include: Working Holiday Visa (subclass 417 or 462) Student Visa (subclass 500) Temporary Skill Shortage Visa (subclass 482) Graduate Visa (subclass 485) Partner Visa (subclass 820/801 or 309/100) If you earn more than the tax-free threshold (currently $18,200), you must lodge a return. 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This usually applies to: Australian citizens or PRs working overseas temporarily People who still maintain strong ties to Australia Note: Most temporary visa holders don’t pass this test unless they’ve been in Australia long-term. 3. The 183-Day Test. If you’re physically in Australia for 183 days or more in a financial year (doesn’t need to be consecutive), you may be a resident—unless your usual place of abode is clearly overseas and you don’t intend to live here. You’re likely a resident if: You stay for 6 months or more You rent long-term accommodation You’re working or studying with the intention to remain for an extended time Common visa types & how tax applies. 1. Student Visa (Subclass 500) Likely considered a tax resident if you stay over 6 months Can claim the tax-free threshold ($18,200) Can deduct eligible expenses (like textbooks, computers for study if working in a related field) 2. Working Holiday Visa (Subclass 417 or 462) Taxed at a flat rate of 15% on income up to $45,000 Must lodge a return if you earn any income Generally, not eligible for the tax-free threshold Superannuation can be claimed back when leaving Australia (through DASP) 3. Temporary Skill Shortage (TSS) Visa (Subclass 482) Often considered a tax resident, especially if you're working full time and have relocated Must lodge a return and may be eligible for tax offsets Can claim work-related deductions and rental expenses (if conditions apply) 4. Partner Visa (Subclass 820/801 or 309/100) Usually treated as a resident for tax purposes Same obligations and entitlements as an Australian citizen Tax returns may support future PR or citizenship applications Key differences for visa holders. 1. Tax Residency Status Your tax residency is not the same as your immigration residency. You could be a temporary visa holder and still be considered an Australian resident for tax purposes. If you're a resident for tax purposes, you may be eligible for the tax-free threshold and lower tax rates. If you're a non-resident, you’ll pay tax on every dollar earned (no tax-free threshold) and possibly at higher rates. Factors like how long you’ve been in Australia, your living arrangements, and whether you plan to stay long-term affect your tax residency status. The ATO provides a residency test to help determine your status. 2. Working Holiday Makers If you hold a working holiday visa, you're taxed at a special flat rate (15% on income up to $45,000 as of 2024-25), regardless of your residency status. You're still required to lodge a return if you’ve worked. 3. Access to Tax Offsets and Benefits Only Australian tax residents can access certain tax offsets, such as the low-income tax offset. You may also qualify for superannuation contributions, but you'll need to apply for a Departing Australia Superannuation Payment (DASP) when leaving the country permanently. What are the common mistakes to avoid? We see four common mistakes: Assuming you don’t need to lodge because you're a student or on a short-term visa Not declaring all income (including freelance or cash jobs) Using the wrong tax residency status Forgetting to lodge a return when leaving Australia Let us take care of your tax return. Whether you're a student, skilled worker, working holiday maker, or about to leave Australia permanently, getting your tax return right is crucial. This is a niche area Ascent Accountants specialises in. We understand the unique situations that come with different visas—and we make sure you claim every dollar you’re entitled to. Contact us today to get started.
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