Business Tax: Essential Documents To Give Your Accountant

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Are you preparing for your business tax lodgement? Do you have a list of everything your accountant needs when tax time comes?

The importance of preparing for your business tax return cannot be overstated. It is a legal obligation many business owners find overwhelming and stressful. However, with the right preparation and a checklist of essential documents at your disposal, this period can transition from a time of stress to an opportunity for maximising your benefits and minimising your tax obligations.

The ATO requires businesses to keep records for 5 years (in most cases) from when you lodge your tax return. Therefore, it’s extremely important to have a robust recordkeeping system in place.

Check the due date to lodge your business tax according to your industry and circumstances. Late lodgement can result in penalties of $222 per day past due up to a max of $11,110.

Being well-prepared not only streamlines the process for you and your accountant but also ensures that you’re taking advantage of all the deductions and credits your business is entitled to.

Whether you have an in-house accountant, an outsourced accountant, or only contract one when needed, here’s a comprehensive guide outlining all of the documents and information you need to have ready for your accountant to lodge your business tax return efficiently.

Download our FREE Business Tax Documentation Checklist pdf or read more below.

1. Financial Statements

If your accountant did not prepare your financial statements, ensure that you provide these to your accountant before the end of the financial year.

Financial reports act as summaries of the company data. There are four common reports with each statement looking at a particular aspect of the business.

For example, the Profit and Loss Statement provides a clear overview of your business’s financial performance, detailing your total income and expenses over the financial year. Whilst the Balance Sheet offers a snapshot of your business’s financial health at the end of the financial year, the balance sheet includes details on assets, liabilities, and equity.

Include the Cash Flow Statement and Statement of Changes in Equity for your tax preparation with your accountant.

2. Bank and Credit Card Statements

Ensure all statements are complete for the financial year, as these verify the amounts recorded in your financial statements. Cross-referencing the bank statements with your financial statements helps identify discrepancies and substantiate your claims.

Ensure you have the the data and details that show:

  • Bank interest
  • Bank fees
  • Distributions from trusts, partnerships, and managed super funds
  • Superannuation lump sum payments
  • Dividends
  • Capital gains
  • Foreign income
  • Net income/loss from business
  • Rental income

3. Inventory Records

If your business holds stock, an inventory count at the end of the financial year is necessary. This includes the value of the stock on hand, which affects your cost of goods sold and, consequently, your taxable income.

Prepare the following documents:

  • Purchase records from suppliers
  • Work sheets for calculations
  • Records of the inventory
  • Cash register (till) tapes/totals

4. Records of Assets and Depreciation

Asset Purchases and Sales: Keep a record of assets you’ve bought or sold throughout the year, including the purchase or sale date and amount. This information is needed to calculate depreciation or to determine any gain or loss on sales.

Depreciation Schedule: If already established, this document outlines the depreciation expenses claimed on assets, affecting your business’s profit and tax liability.

Motor Vehicle Logbook: Maintain accurate records of vehicle expenses based on business use percentage. Include paperwork for registration, repairs and servicing, and insurance.

5. Loan Documents

Details of any new loans or changes to existing loans during the year are important. Expenses on business loans are generally tax-deductible.

According to tax law, the business loan amount is the amount the business needs to return to the lender, but the interest is the expense accumulated in order to borrow that money. Therefore, the loan amount is not tax deductible, but the interest paid on the loan is.

Certain fees associated with obtaining a business loan, such as application fees or origination fees, may also be deductible. And if you’re required to purchase insurance to secure your business loan, the premiums you pay may be tax-deductible as well.

If a business were to restructure a loan or refinance to decrease monthly payments on the remaining amount, then the associated expenses may be impacted, and your tax deduction will need to be adjusted as well.

6. Expense Receipts

All receipts for expenses claimed must be kept as they are essential for verifying deductions. This includes operating expenses, business travel, office supplies, and other business-related expenses. Scan and file them electronically to be accessible should you need them for audit purposes.

If you have a lot of travel included in your operations, a travel diary of who, where, and when is highly recommended. Include boarding passes and tickets or any receipts in the travel diary.

Alternatively, if the business has employees working from home, the information required to substantiate claims for all home-based business expenses can also be kept in a diary. Businesses also need a copy of receipts for purchases and repairs, utility bills and occupancy expenses (if claiming such).

Ensure the following areas are covered (if applicable):

  • Purchase and repairs of furniture and equipment used for WFH
  • WFH utility bills and cleaning expenses
  • Mortgage interest, rent, insurance and council rates (to claim occupancy expenses)
  • Rental contract between homeowner and business (to claim occupancy expenses)
  • Travel diary – domestic and overseas
  • Boarding passes
  • Tickets
  • Computer, software and repairs
  • Tools and equipment
  • Rent/lease payments
  • Building or maintenance costs
  • Utilities – electricity, gas, water
  • Telephone and internet
  • Income protection insurance
  • Dividend deductions
  • Fuel and oil receipts
  • Work uniforms and other clothing expenses
  • Freight and transport costs
  • Legal and accounting fees
  • Donations
  • Medical expenses
  • Childcare expenses
  • Credit card vouchers
  • Diaries to record cash expenses

7. Payroll Records

If your full-time accountant is the one lodging your business tax, they will already have this information as they most likely manage your payroll records. But if not, these documents should include total wages paid, PAYG withholding, and superannuation contributions. These records are vital for your employees’ PAYG summaries and impact your business’s taxable income.

Provide your accountant with the following documentation:

  • PAYG summaries from employees
  • Personal services income
  • Lump sum termination payments
  • Wages and salaries
  • Training costs
  • Courses, education and seminars
  • Superannuation contributions

8. Government Grants and Payments

Documentation related to government grants or payments received during the year is crucial, as these can affect your taxable income.

Generally, grants or support payments from the government need to be included as assessable income in your tax return, unless they are specifically made non-taxable. This will include help provided as a one-off lump sum or a series of payments.

There are many grants and programs available to support businesses. One that was created recently is the Funding for tourism operators impacted by Tropical Cyclone Jasper.

There are also state-specific grants that can assist locals with ongoing opportunities to instil resilience and economic growth in the state. These will all need to be stated in the tax return lodgements.

Why Business Tax Preparation Matters

The key to a successful tax return lies in the detail and accuracy of the documentation provided to your accountant. Ensuring that all necessary documents are accurate, organised, and readily available enables your accountant to:

  • Identify all allowable deductions, minimising your taxable income.
  • Ensure compliance with tax laws, avoiding penalties or audits from the ATO.
  • Strategically advise on tax planning opportunities for the coming year.

Remember, tax planning is a year-round endeavour. The more engaged and prepared you are, the more your business will be better positioned to maximise benefits and minimise obligations. Being prepared is not just about having your documents ready; it’s about setting the foundation for a robust financial strategy that propels your business forward.

Rispin Group is dedicated to guiding our clients through tax season with as little stress as possible. Our goal is to assist you in fulfilling your tax obligations and explore every avenue to enhance your business’s financial health.

If you have any questions or need assistance preparing for your business tax return, the Rispin Group team is here to help. Contact us, and let’s make this tax season a stepping stone to greater success.

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