Guide to Lodging Taxes for Small Businesses

If you’re a sole trader, partnership, or company in Australia, there are a few options for lodging your tax return. This guide explains the process and your options as a small business.

The Australian Taxation Office (ATO) administers and collects taxes in Australia, though state government and revenue offices do so in some cases. The financial year for tax purposes starts on 1 July and ends the following year on 30 June. Tax obligations vary according to the business type, number of employees, and the fringe benefits a business offers its employees. 

If you’re running a small business in Australia, it’s important to understand federal and state tax requirements that apply to your business. Here’s an overview of how to lodge taxes for different types of businesses:

How to Lodge Taxes as a Sole Trader

If you run your venture by yourself, you are a sole trader. As a sole trader, you and your business are considered a single entity, so you won’t have to lodge a separate tax return for your business. You’ll only need to file one individual tax return that will cover both your personal and business income. 

As a sole trader, you can lodge taxes in one of the following three ways:

1. With myTax

 You can lodge your individual tax return online via the ATO myTax portal. To do so, you need a myGov account linked to the ATO. If your myGov account is already linked, you can start your tax return with myTax. 

2. Through a registered tax agent

Tax agents are specialist accountants who have studied both tax and law, thus can do tax preparation and lodge tax returns. They are eligible to offer tax services to the public so long as they are registered with the Tax Practitioners Board and renew their license every three years. 

Note that registered tax agents operate on their own lodgement schedule. Nevertheless, you need to engage a registered tax agent before 31 October, which is the due date to lodge your tax return. If that date falls on a weekend, the due date to lodge your tax return is the next business after 31 October.   

3. Complete a paper tax return

With this option, you should start by downloading the Tax Return for Individuals Form. Alternatively, you can place an order for paper copies to be mailed to you by phoning the automated Publications Ordering Service.

How to Lodge as a Partnership

A partnership is a business structure involving two or more people who distribute profit or loss between themselves. Unlike sole traders, partnerships need to lodge a separate tax return, thus requiring a separate Australian Business Number (ABN) for their business. 

Partnerships can lodge taxes in one of the following three ways:

1. Using SBR-enabled software

Standard Business Reporting (SBR) is an initiative that enables businesses to submit information directly to government agencies via their accounting software. As such, you can prepare and lodge your taxes with ATO directly from your SBR-enabled software. 

2. With a registered tax agent

Like with sole traders, those in a partnership  can engage the services of a tax agent to lodge taxes for their small business. Most registered tax agents have a special lodgement program and can lodge tax returns for their clients after the usual 31 October deadline. If you opt for this option, you can engage a tax agent either face-to-face or online. 

3. Complete a paper tax return

You should download the Partnership Tax Return Form and complete it accordingly. Alternatively, you can order a paper copy of the Partnership Tax Return by phoning ATO’s Publications Distribution Service. After completing the paper copy of the Partnership Tax Return, you can lodge it by mail to:

Australian Taxation Office

GPO Box 9845

[Insert the name and postcode of your capital city]

If you lodge the partnership tax return yourself, you should ensure that you lodge before the due date, which is 31 October. If you choose to lodge with the help of a registered tax agent, you will be informed of when they will lodge your tax return. 

How to Lodge Your Taxes as a Company

As with other business entities, ATO requires small companies to lodge their company tax return for every financial year they trade. For the 2021/2022 financial year, small companies are subject to a small business tax rate of 25% on their taxable income. 

What are the Company Tax Return Lodgement Options?

To lodge the company tax return, you have three options, just like sole traders and partnerships. These options are:

• Lodge the company tax return with myTax,
• Hire a registered tax agent to lodge on your behalf,
• Download or order the company tax return form, complete it, and mail it to the ATO.

What are the Due Dates for Your Company Tax Return?

While majority of company tax returns are due 28 February, company tax returns lodgement dates vary. For instance, if you lodge your company tax returns on your own, you are expected to lodge by 31 October each year. 

If a tax agent does the lodgement on your behalf, they will follow their lodgement schedule, which may be after 31 October. Nevertheless, you should engage a tax agent before 31 October. In case the lodgement of the company tax return generates a tax bill, you will have to pay the amount by 21 November in the same year. 

Conclusion 

As a business owner, you must know what your business earned first in order to calculate your taxable income. You must also know what items to include and what to exclude. Without a bookkeeping process in place, you may not have financial information ready for tax time. 

The tax lodging process can be made more efficient by hiring bookkeeping and financial services. This is where Visory comes in. 

We are a reliable provider of advanced bookkeeping and financial support for growing businesses. Our digitally enhanced services help to  streamline your back-office and provide efficiencies in both time saving and cash flow improvements.   Furthermore, our business reporting gives detailed insights to help you make the best decisions for your business.

Learn more about Visory’s Bookkeeping and Financial Services for Growing Businesses.