Running a business is tough, it takes more than just dedication and professional skills to make a business success. We have seen many talented sole traders fail their businesses through poor tax compliance. They do not keep their bookkeeping up to date, prepare their tax compliance late, build up unexpected tax debt, and worst of all, do not know how they can fix the issue when ATO get on their back. Here we’re going to show you everything you need to know about sole trader tax compliance and how you can manage the late compliance if you already fall behind.
Know Your Tax Rate
As a sole trader, you pay the same tax as individual taxpayers. It is important to know that the rates can change from year-to-year, so it’s important to know what the rate is for the income year you’re reporting on.
Know Your Tax Type
Different from an employee, the sole trader needs to manage other tax they need to pay. For example, if your annual business turnover is over $75,000.00, you need to register for GST and report the GST either on the quarterly or yearly basis. Besides, if you are hiring any employees, do not forget to pay the correct amount of PAYG Withholding. Last but not least, be careful about how you Superannuation payment. The superannuation is not a tax, but fall behind the superannuation payments can cause serious trouble for your business.
Know Your Compliance Lodgement Due Date
For sole traders, when it comes to the tax, following are the typical forms of the tax reports and relevant lodgement due dates:
Quarterly reporting BAS, including GST, PAYG
Quarter is due to be lodged by 28th of each month after the quarter-end.
If a BAS agent lodges your quarterly activity statements, you may be eligible for a two-week deferral.
Tax return for sole traders is usually due by 31 October of each financial year. If you have a tax agent, you may be eligible to defer the lodgement to 15 May of the following year.
Know Your Tax Debt
For a lot of sole traders, the bookkeeping seems to be a full-time job. After all, more than 90% of the sole traders who fall behind on their record keeping either can not afford expensive bookkeeping cost or do not have time to manage by themselves.
Another problem faced by traditional accounting is the record does not provide updated tax debt information on-time. A lot of owners are surprised by how much tax they need to pay when the bookkeeping is done.
To overcome the above issues, we designed the affordable compliance service program. The service is designed for business owners who want to offload the hefty compliance work and still be able to stay on top of their tax.
You can also talk to us if the business is already falling behind of the tax reporting and you want to do something to fix before it's too late. Our professional team is well trained to deal with overdue returns. And we look after each step of your business recovery process to help you get back on track!
If you need help to reduce your tax compliance workload, please feel free to contact us for a free consultation.