Six things to do now to make tax time 2020 a little less taxing

New decade, new me? We’re more than two weeks into the New Year now and the countdown clock to tax time 2020 has already started ticking.

It’s going to be a big year for SMEs in the tax domain, with some changes on the cards heading into July — not least of which is the end of several exemption periods for single touch payroll (STP) reporting.

For small business owners, July might seem like an eon away, but accounting experts are advising SMEs to get on the front foot now to avoid unnecessary headaches in a few months.

It’s never a bad time to get your tax affairs in order, or to plan ahead to ensure your taxation obligations don’t pop up as a rude surprise later this year.

Perigee Advisers principal Lisa Greig tells SmartCompany small business owners should be getting their tax ducks in a row now and planning for the cashflow implications of tax time as early as possible.

“Cashflow needs to be looked at in terms of tax planning,” she says.

“Remember: tax impacts your cashflow.

“If your business is struggling, consider paying GST or instalment rates in payment plans.

“There’s a lot of SMEs finding it financially tough at the moment, and plans can help them weather the storm.”

Greig also advises business owners to remember that if they’ve made a donation to a bushfire cause in recent weeks, it won’t be tax-deductible unless the entity is a registered charitable organisation.

Social media and crowdfunding campaigns don’t fall under this banner; it doesn’t make these initiatives less worthy of support, but it does have tax implications.

Business owners are advised to talk to their accountant about their tax position and consider how incoming revenue over the next six months places you to meet your obligations without putting a strain on operations or other growth plans.

For many small businesses, tax time 2020 will be a bit different due to the inclusion of STP reporting obligations. The tax office will kick its compliance action into gear for firms that still haven’t signed up for the reporting scheme past July 1, while exemptions for closely held payees (family members working in the business) also end on this date.

That means depending on the structure of your company, you may need to work through some red tape between now and July 1.

If your business still hasn’t signed up for STP reporting and doesn’t use digital payroll software already, you may want to consider getting a wriggle on. Some companies have reported needing to do a good deal of housekeeping to enable digital accounting software and tick all the STP boxes.

New year tax tips for SMEs

Stacey Price, accountant and owner of Healthy Business Finance, tells SmartCompany there are other some important tax things for small business owners to keep in mind at this time of year.