6 Tax Saving Tips Sole Traders Need To Know In 2022
Now that we are past the Christmas and New Year period, we are heading straight towards every business’ favourite time of the year -the end of the financial year! This is often a stressful time for small businesses, particularly sole traders, who aren’t always aware of exactly what they need to do to prepare for tax time. There’s one sure way to avoid that last-minute rush: making sure you’re prepared for tax time.
It’s a good idea to start considering what tax-saving tips to put in place NOW to maximise benefits for the short, medium and longer-term later on. So without further ado, here are our 6 tax-saving tips sole traders need to know in 2022!
ONE - Prepay some of your 2022-23 expenses (such as your rent, insurance or subscriptions to professional associations) in the 2021-22 financial year. Up to 12 months of the following year’s expenses can be deducted in the current tax year
TWO - Take advantage of depreciation measures, such as temporary full expensing, which enables you to immediately deduct the business portion of the cost of eligible new depreciating assets that are first held and first used or installed ready for use for a taxable purpose.
THREE - Review the deductibility of any start-up expenses – such as obtaining legal or accounting advice on your business structure, and fees in relation to establishing the structure (eg. ASIC company registration fee).
FOUR - Don’t forget about your sole trader superannuation contributions. Sole traders can contribute up to $27,500 to their superannuation and claim a tax deduction for these amounts.
FIVE - See if you’re eligible for the small business income tax offset. You may be able to receive an 8% rebate, up to $1000, on the tax payable on your business income. In order to be eligible for this offset, you must carry a business as a sole trader or have a share of business income from a partnership or trust. Your aggregated turnover must also be less than $5 million.
SIX - Book a tax planning strategy meeting with Iron Advisory. Tax planning is about dedicating time and expertise to planning the best tax strategy for you. There’s no one-size-fits-all approach to tax planning. The goal is to reduce your taxable income so you pay less tax. And by doing so, you’ll maximise the money you keep hold of to spend on whatever you choose.
What can you expect from a tax planning strategy with us?
We estimate your taxable income and the total amount of tax debt owed, including all income, interest, dividends, rental income, business profits/losses, and any capital gain or losses you expect to make
We discuss all of your tax options which may include reviewing your business expenses to ensure you are claiming everything possible, reviewing your trading structure to ensure it is appropriate and tax-effective, bringing forward business purchases if necessary and maximising your deductible super contributions, just to name a few!
We then provide you with a detailed Tax Plan that explains the strategies we recommend and exactly how much each strategy will save you in tax
We provide you with an Action Plan to ensure that everything that needs to be actioned is completed before 30 June
To discuss tax planning sessions further, you can book a free consultation with us.