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The Ins and Outs of small business tax preparation
A ‘small business entity’ has an aggregated turnover of less than $2 million. A turnover includes all gross income or proceeds earned in the ordinary course of business for the income year. It does not include any goods and services tax (GST) amounts charged on the sales.
Small business entities have been eligible but must meet certain conditions for a range of tax concessions. Eligible businesses can choose to use the concessions that suit their business, although they may have to satisfy additional conditions. They have to calidate whether they can be qualified for the concessions each tax year.
A business is not considered a small business entity if its aggregated turnover is more than $2 million. Nonetheless, that business entity may still be eligible for the CGT small business concessions (if it has net assets of $6 million or less), and the FBT car parking exemption (if total ordinary income and statutory income does not exceed $10 million).
A small business can be managed in different ways although it has corresponding tax implications.
A small business tax of a sole trader consists of assessable business income less the business deductions you can claim and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income, less any allowable deductions against this income.
A small business tax of a partnership factors in the partnership’s income minus expenses and deductions. The partnership may also have to provide other forms and schedules. As part of the partnership, you must also declare the following on your individual tax return your share of any partnership net income or loss and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income.
A small business tax of a trust is the trust’s income minus expenses and deductions. The trust may also have to complete other forms and schedules. As a trust beneficiary, you must also report the following on your personal income tax return any income you receive from the trust and any other assessable income, such as salary and wages (shown on a payment summary), dividends and rental income.
Keep in mind, as a sole trader, partnership or trust, the report contains only your taxable income and net income or loss in your small business tax. You do not have to work out the amount of tax you are liable to. You may be qualified to claim a tax offset based on whether you maintain a dependent, whether you live in a remote area and how much taxable income you earned.
A Final Word
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Article(C)2009 - 2010 cluense, all rights reserved. Cluense creates articles and posts online. She creates articles on, accounting, entrepreneur, political issues, small business, society, relationships, taxes, work from home businesses, and Tutorials. She also has a strong passion for writing.