Running your own business is exciting, but it comes with its own set of financial responsibilities — including navigating complex tax rules. Smart planning can help reduce your tax, maximise deductions, and keep your business financially healthy.
Here’s what every small business owner should know.
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Claim Business Expenses Diligently
Business expenses are one of the easiest ways to reduce taxable income. Eligible deductions include:
- Office equipment, software subscriptions, and phones
- Advertising, marketing, and website costs
- Accounting, bookkeeping, and professional fees
- Travel and vehicle expenses directly related to business activities
Hack: Keep receipts, invoices, and logbooks for all expenses. Even small items like printer ink or stationery can add up to significant deductions at tax time. Don’t forget to apportion deductions for any personal use.
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Take Advantage of Asset Deductions
Investing in business assets can provide tax benefits through:
- Immediate write-offs for low-cost assets under the simplified depreciation rules
- Depreciation over time for larger assets such as machinery, computers, or office furniture
Hack: Maintain a detailed asset register to track purchases, depreciation, and write-offs. Using accounting software can simplify this process and ensure nothing is missed.
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Optimise Your Pay Structure
Choosing the right method to pay yourself can have major tax implications:
- Salary: Deductible for super contributions, predictable cash flow
- Drawings: Flexibility, but not tax-deductible
- Dividends: Taxed differently depending on your business structure
Hack: Combine salary, drawings, and super contributions strategically. A small adjustment could reduce tax and boost retirement savings. Don’t forget to talk to your accountant to ensure you understand requirements of loans that originate from drawings.
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Choose the Right Business Structure
Your business structure affects tax, liability, and growth potential:
- Sole trader: Simple structure, profits taxed at personal rates
- Partnership: Shared profits and tax obligations
- Company: Potential tax advantages and liability protection
- Trust: Flexibility in distributing income and reducing tax
Hack: Review your structure annually, especially if your income or business activities change. Structuring correctly can save thousands in tax and protect personal assets.
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Leverage CGT Small Business Concessions
When selling your business or business assets, you may qualify for capital gains tax (CGT) concessions, which can reduce, defer, or even eliminate CGT. Consider:
- Timing of asset sales: Selling assets strategically can reduce tax exposure
- Eligibility for concessions: Small business CGT concessions may include 50% reduction, retirement exemption, and rollover relief
Hack: Seek advice before selling assets. CGT planning works best when incorporated into your broader business strategy.
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Plan for Super Contributions
Making concessional super contributions for yourself or employees can reduce taxable income while building long-term wealth:
- Employer contributions are deductible
- Salary sacrifice contributions reduce taxable income for employees
Hack: Use super contributions strategically to balance personal savings, business cash flow, and tax benefits. Ensure you make Superannuation Guarantee payments on time to maintain deductibility.
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Keep Detailed Records
Accurate records are the foundation of good tax planning:
- Maintain receipts, invoices, and contracts
- Track assets and depreciation schedules
- Document pay structures, contributions, and business expenses
Hack: Accounting software makes record-keeping simple, reducing stress at tax time and ensuring maximum deductions.
The Bottom Line
Running a small business comes with challenges, but strategic tax planning can make a big difference. By claiming all eligible deductions, managing asset depreciation, optimising pay structures, leveraging CGT concessions, and keeping detailed records, you can reduce tax and reinvest in your business.
At Lemonade Beach Accounting, we help small business owners navigate the tax system, maximise deductions, and plan for long-term growth — so you can focus on running your business with confidence.
Ready to Optimise Your Small Business Taxes?
Book a Tax Planning Appointment with Lemonade Beach today — we’ll review your business expenses, pay structures, and CGT planning to make sure your tax strategy supports growth and long-term success.
FAQs: Tax Tips for Australian Small Business Owners
What business expenses can I claim as deductions?
You can claim expenses that are directly related to running your business, such as office equipment, software subscriptions, advertising, travel, and professional fees. Keeping receipts, invoices, and logbooks is essential.
How do asset deductions work for small businesses?
Low-cost assets may be immediately written off under simplified depreciation rules, while larger assets can be depreciated over time. Maintaining an asset register ensures you track purchases and claim all eligible deductions.
What is the best way to pay myself as a small business owner?
Options include salary, drawings, or dividends, each with different tax implications. Combining these strategically — along with super contributions — can reduce tax and support long-term savings.
How does business structure affect tax?
Your structure (sole trader, partnership, company, or trust) impacts taxable income, liability, and growth potential. Reviewing your structure annually can help optimise tax outcomes and protect personal assets.
What are CGT small business concessions?
When selling a business or business assets, small business CGT concessions can reduce, defer, or eliminate capital gains tax. Planning the timing of asset sales and understanding eligibility is key.
Can super contributions reduce my business tax?
Yes. Employer contributions and salary sacrifice contributions for yourself or employees are deductible, helping reduce taxable income while building long-term wealth.
Why is record-keeping so important for small businesses?
Accurate records of expenses, assets, pay structures, and contributions ensure you claim all eligible deductions, comply with ATO rules, and reduce stress at tax time. Accounting software can simplify this process.
Want to see what tax strategies are right for the next stage of life? Check out our guide for Property Investors & Landlords.
Return to Maximising Tax Benefits for Growing Families in Australia.
