Navigating the realm of taxation can be a daunting task for any business owner, not to mention those operating multiple businesses. Regardless, lodging an accurate tax return is a legal requirement and is necessary to maintain your business's financial health.
Here's an insightful guide on the fundamentals of filing a tax return when you own multiple businesses.
Understand Your Business Structures
Firstly, the process of lodging a tax return will largely depend on the structure of your businesses. Broadly, your businesses may be categorised as either sole trader, partnership, company, or trust.
For a sole trader and partnerships, you'd report the income in your personal tax return using a separate Business and Professional Items schedule for each business. On the other hand, if your businesses are set up as separate companies or trusts, each will need to lodge its own tax return.
Recognise the Different Types of Income
An indispensable step in the preparation of your tax return is identifying and categorising your sources of income. This income can arise from business sales, investment returns, capital gains, or overseas transactions. Each of these income types might be subject to different tax treatments, hence it's imperative to accurately distinguish and record them.
Know Your Deductions
In Australia, businesses are allowed numerous deductions to reduce taxable income. Expenses related to running the business like rent, office supplies, equipment depreciation, and even staff training, can be deducted.
However, as a multi-business owner, make sure not to dilute the expenses of separate businesses. The Australian Tax Office (ATO) requires expenses to be allocated to the appropriate business.
Employ the Help of a Tax Accountant
Managing the tax requirements of multiple businesses can be quite cumbersome, and this is where the expertise of a business tax accountant comes in. A seasoned tax professional can assist in sorting out your tax affairs, ensure you claim all the deductions you're entitled to and check that you comply with regulatory requirements to avoid potential penalties.
At Perth Tax People, we grasp the complexity of the tax situation that the owners of multiple businesses contend with. Our team of seasoned professionals is experienced in offering bespoke tax solutions tailored to your needs. Contact us now to discuss how we can assist you with your multiple business tax return lodgements.
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