How Accountants Can Help You Find Tax Deductions For Your Small Business?

If you own a small business in Australia, you may be well aware of the tax deductions that you can claim in the tax return lodged at the end of the financial year. 

Tax deductions refer to the business running expenses that can be claimed and thus prove to be very beneficial for small businesses. However, it is a pretty challenging task for a business owner to count all the incurred costs and include them in the tax return. That is why it will be a good idea to look for small business accountants who can efficiently do the job for you while you can concentrate on other duties and responsibilities.

Recent surveys and statistics show that about 74% of small business owners look for tax accountants to do the job for them. But how can an accountant offer such great help to a business? Take a look at the following discussion that is surely going to help you to a great extent.

How Can A Small Business Accountant Help The Owner Track The Tax Deductions?

Various expenses that can be claimed for deductions include office running expenses, repair and maintenance costs, equipment costs, motor vehicle costs, travel costs, etc. In a long financial year, numerous such costs are incurred as they are necessary, and naturally, it is not easy to keep track of them. That is where the role of an accountant can be understood well. Here are the four strategies they use for the work.

  • They Advise The Business Owner To Open A Separate Business Account

Business and personal finances need to be kept separated. Otherwise, two of them will mix up and subsequently make an owner’s job challenging to track specific business costs. So, the first thing an accountant will advise a business owner is to open a separate business account. 

Once several separate financial accounts are opened, expenses related to the business will become much more crystal-clear. You can then use these accounts for all kinds of sales and purchases. And as you will have a professional accountant, organizing the finances will also become easier. 

For your business, the accountant will generally suggest you open a business savings account, a business checking account, and have a business credit card. Having business credit cards is also beneficial for another reason. They offer attractive rewards like cashback, collecting points for hotels and flights, etc.

Accountants usually recommend avoiding cash transactions because cash can be easily spent, is hard to keep track of, and the only backup related to it is a receipt. On the other hand, digital transactions will come with a receipt as well as a bank statement record.

  • The accountants properly store the receipts

One of the most important jobs that an accountant does for tracking business expenses is storing all the receipts. Receipts include both paper and digital. 

For paper receipts, they follow some methodical yet straightforward steps. First of all, they maintain a separate envelope to keep the paper receipts. Typically, they maintain a daily basis but sometimes a weekly basis, too, depending on the circumstances. In addition to envelopes, they also use separate file folders for each month in which they put all the bills and invoices. Maintaining monthly folders makes their task smoother. Another job they do is to write the purpose of the purchase on the receipt copy. Some accountants also recommend using a business calendar.

On the other hand, for digital receipts, accounting professionals use software applications. Some applications now offer unique features that let them take photos of receipts and store them in the cloud. This process automatically adds the costs to the account books. 

Accounting software connects to the business bank accounts and credit cards, thus updating the expenses daily. You will need not take printouts of the receipts and remember every transaction detail made throughout the day. Another benefit of using accounting software is that paper receipts always have the chance to get lost, but nothing can happen to the cloud-stored data unless you delete it from there.

  • Your Accountant Will Help You Designing The Spreadsheet

Are you starting your business? If yes, then maintaining spreadsheets can be a practical option for tracking the tax deductions. And your business advisor Perth can help you with it.

Designing the business spreadsheet from the beginning involves manual tracking of every running cost made the whole day. No automatic expense tracker is used in a spreadsheet. You can sit with your accountant, make separate categories, and divide them into particular columns to design them. Having access to Google or Excel Sheets will make the job easier. If your business grows in the future and you switch to using accounting software, you can then think of importing these spreadsheets into that software. 

The accountant will help you name the columns, including Date of Purchase, Category of Purchase, Vendor, Cost of Purchase, and Purpose. Thus, if you buy a printer machine on a specific date from a distributor, you have to include the distributor’s name in the ‘Vendor’ column, and in the ‘Purpose’ column, you have to write ‘printing.’

What Are The Benefits Of Hiring An Accountant For This Purpose?

Now, let us summarize the benefits of hiring a professional tax accountant in calculating the tax deductions.

  • It will save you ample time. In a one-hour discussion, the accountant will want to know key points about your business.
  • A tax professional knows all the tax laws and thus can make sure the return is lodged perfectly. It reduces much stress for the owner.
  • If a tax agent lodges the return, the Australian Taxation Office extends the deadline.
  • Senior tax agents have worked for many years in the field and handled numerous situations. They know every tax return is unique and offer help according to the case.

Final Words

You may be worried about the amount of fee you have to pay your accountant. Well, you should not be because that charge can also be claimed as a tax deduction. So, if you are ready to launch as a sole trader or your small business shortly, get in touch with leading tax consultancy firms to hire a tax accountant and sit with them for plans. 

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