When your clients are busy running a business, understanding tax rules can take a backseat to other priorities.
We know small businesses work hard to get their tax and super right; however, we understand mistakes can still happen. We’re seeing sole traders make mistakes in these areas:
- not reporting all income – this includes income earned outside their business (like a side hustle), cash jobs or payments in-kind/barter deals (such as the value of goods or services received in exchange for work)
- overclaiming expenses – this includes claiming the portion of an expense related to personal use or overstating the cost of goods sold and other business expenses
- calculating business losses
- incorrectly claiming and offsetting losses from non-commercial business activities against other income sources
- claiming PAYG withholding refunds
- misreporting personal services income (PSI) to gain tax benefits
- not registering for GST if they are in the taxi or ride-sourcing industry or when they reach or expect to reach the GST threshold
- not keeping accurate and complete records.
Help your clients avoid these mistakes by referring them to our Tax Time toolkit for small business. There’s a directory of links, including information on business income and deductions, to help them get things right.
You can also encourage clients to use the ATO app to access and manage their tax and super and the myDeductions tool to capture expenses as they arise.
If your clients are unsure what records to keep, they can take this free, self-paced course in record keeping: Essentials to strengthen your small businessExternal Link.