H&R Block’s Mark Chapman: How small businesses can stay ahead of the tax curve
The director of tax communication talks technology, tax breaks and the surprising stats revealing what business owners are most confused about.
It won't be news to them, but the stats are in and small business owners are confused about tax. A national survey conducted by Officeworks and H&R Block found that a surprising 36% of small business owners (SBOs) say they are only "moderately" prepared for their tax return and 15% say they are not equipped at all.
According to H&R Block's director of tax communication Mark Chapman, while there's no reason SBOs should be tax experts, being proactive with tax will benefit their businesses.
"A lot of small businesses, particularly in that micro sector of small businesses, only have an interaction with their accountant once a year when they go and do their tax return. That means it’s a very transactional relationship."
"If you actually want to stay ahead of the curve when it comes to tax, you need to have a slightly more proactive relationship. That might mean going to see them once or twice a year away from the hassle of tax time."
I think in relation to tax I think a lot of small businesses just aren’t listening
Chapman suggests talking to your accountant about your activities and what your aspirations are. You can then get advice as to how tax is impacting your business.
"That will generate a very substantial return in terms of how you can structure your business more tax effectively going forward."
The survey also found that only 5% of businesses track their receipts through a digital platform, which Chapman believes comes down to a lack of understanding about the technology that's available.
"I think a lot of small businesses just haven’t cottoned on to the fact that it is so possible to do so much using new technology. You don’t need fancy accounting software to do this, you just need a mobile phone with a camera."
Not only does tracking receipts digitally save time at the end of financial year, but Chapman points out that it removes the risk of losing receipts or of the receipts fading.
Confusion around tax breaks
For Chapman, the most troubling statistics revealed in the national survey was the confusion around the $20,000 tax break.
"The research showed that 78% of SMEs don’t understand the $20,000 tax break. And, to be honest, that is a weird finding because there has been a lot of communication around that."
Chapman believes many business owners simply lumped this tax break in with other negative aspects often associated with tax.
"In relation to tax, I think a lot of small businesses just aren’t listening. They just bury their head in the sand because tax is an unpleasant thing and it’s something to be avoided if possible."
However, the $20,000 tax break has "significant upsides".
"It gives small businesses the opportunity to improve profitability and productivity going forward by investing in capital assets and getting a really generous tax break at the same time."
For businesses looking to take advantage of the $20,000 tax break, Chapman says there is still time.
"Go into a store like Officeworks and see what they have that could be useful for your business. If you need tax advice before EOFY talk to your accountant. They’ll be able to help you get a handle of what you can claim deductions for and hopefully give you a bit of an extra tax boost before 1 July."
The Officeworks "Happy Tax Place" lets small business owners search for products they can purchase which might be tax deductible as well as find tips and advice on how to maximise their tax opportunity.
DISCLAIMER: This article is general advice. It does not consider your own personal circumstances and may not be applicable to you. You should obtain professional advice and consider your own situation before acting on anything contained in our article.
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