Tax time often creeps up quickly for small business owners – and lodging a return isn’t always as straightforward as it seems. With different rules depending on your structure, evolving ATO processes, and deductions you might not even realise you’re eligible for, it’s easy to make mistakes or miss opportunities.
Here’s a breakdown of the key things every small business owner should understand when preparing for tax time in 2025.
What’s the Most Common Mistake Small Business Owners Make?
The most common mistake? Poor record-keeping and leaving things too late. Many small business owners only start thinking about tax once EOFY hits, which often means scrambling for receipts, overlooking deductions, or misreporting income. This can lead to ATO penalties – or simply paying more tax than necessary.
Having systems in place to track income, expenses, and superannuation contributions throughout the year makes a huge difference come tax time.
Key Differences in Tax Obligations by Business Structure
Understanding your obligations starts with knowing how your business is structured:
Sole Traders
- Lodge as part of your personal income tax return.
- Use your individual TFN, but still need an ABN.
- All business income is taxed at your personal marginal rate.
- You can claim business-related expenses to reduce your taxable income.
Partnerships
- The partnership lodges a separate tax return, showing how profits or losses are split.
- Each partner pays tax on their share of income via their individual return.
- You’ll need a formal partnership agreement, plus a separate ABN and TFN.
Companies
- Companies are separate legal entities and must lodge their own company tax return.
- Profits are taxed at the company tax rate (typically 25% for base rate entities).
- Directors/shareholders pay personal tax on dividends or wages.
- Record-keeping and compliance obligations are more complex than for sole traders or partnerships.
Trusts
- Trusts lodge a trust tax return, but typically don’t pay tax themselves unless profits are retained.
- Instead, income is distributed to beneficiaries, who pay tax individually.
- Trusts require a trustee (individual or corporate), a TFN, and a trust deed outlining income distribution.
When Should a Business Start Using a Tax Agent?
If your business structure has moved beyond a sole trader setup, or if your finances are growing more complex, it’s worth engaging a registered tax agent. You should also consider professional support if:
- You’re behind on your BAS or previous tax returns.
- You want to proactively minimise tax through planning, not just compliance.
- You’re unsure how to handle things like GST, payroll, or asset depreciation.
Bonus: using a registered agent also often extends your tax return lodgement deadline beyond the standard 31 October.
How to Lodge a Business Tax Return
Lodging a business tax return involves several clear steps to ensure accuracy and compliance. First, gather all relevant financial records, including income statements, expense receipts, bank statements, and any payroll or superannuation documentation. Next, reconcile these records to confirm that all income and expenses are accounted for correctly.Depending on your business structure – sole trader, partnership, company, or trust – you’ll use the appropriate tax forms, which can be completed either through the ATO’s online services, accounting software, or with the assistance of a registered tax agent.
Before submitting, review your return carefully to ensure all deductions and income are reported accurately. Finally, lodge the return by the due date specified for your business type, either electronically or by paper, and keep copies of all submitted documents and correspondence for your records
If you’re working with an accountant, their approach will typically follow a similar path – but with a more structured and strategic process. Here’s what that usually looks like:
- Initial review: Assess your business structure, previous tax returns, and financial records.
- Document gathering: Collect key reports including profit & loss, balance sheet, and bank statements.
- Reconciliation: Ensure income, expenses, payroll, and super align with your records and ATO requirements.
- Deductions review: Identify all eligible deductions you can claim.
- Lodgement: Prepare and lodge your return with the ATO.
- Advice moving forward: Discuss your results and highlight opportunities for tax planning or restructuring.
Commonly Overlooked Tax Deductions
Even organised business owners miss some of these:
- Home office expenses (internet, electricity, depreciation)
- Motor vehicle expenses (especially when a logbook is required)
- Prepaid expenses (like insurance or software subscriptions)
- Professional development related to your business
- Tools, tech, or equipment under the instant asset write-off threshold
- Business-related travel and accommodation
Just make sure you keep supporting records – receipts, logbooks, or digital trail.
Should You Be Using Accounting Software?
If you’re not already using tools like Xero, MYOB, or QuickBooks, now’s the time to consider it. Accounting software helps:
- Automate bank feeds and reconciliations
- Generate invoices and track receivables
- Simplify GST/BAS reporting
- Collaborate with your accountant in real-time
It also makes tax time faster and more accurate. For many small businesses, the monthly cost more than pays for itself in saved time and reduced errors.
What Documents Should You Have Ready Before Lodging?
Being prepared reduces back-and-forth and ensures nothing is missed. Before lodging your return, gather:
- Profit and loss report
- Balance sheet
- Bank and credit card statements
- Payroll summaries
- Superannuation payment records
- Invoices and receipts
- Any loan or asset purchase agreements
- Vehicle logbook (if claiming car expenses)
EOFY Tax Planning Tips
A few strategies to consider before 30 June:
- Prepay expenses to bring forward deductions
- Contribute to super (ensure it’s paid before EOFY to claim this year)
- Write off bad debts or obsolete stock
- Purchase business assets under the instant asset write-off threshold
- Review your business structure to ensure it’s still the most tax-effective setup
EOFY planning doesn’t just reduce tax – it also gives you a better sense of your business’s financial health heading into the new year.
ATO and Tax Rule Updates for 2025
Here are a few updates that may affect your 2024-25 return:
- Instant Asset Write-Off threshold: Currently set at $20,000 for small businesses (check eligibility before claiming).
- Super Guarantee Rate: Increased to 11.5% from 1 July 2025.
- Data-matching and AI use by the ATO continues to expand – especially across banking, crypto, and invoicing platforms.
- Growing push toward e-invoicing: while not yet mandatory for all, businesses working with government or larger enterprises may need to adopt it soon.
Need Help Getting Your Tax Return Right?
If you’re feeling overwhelmed by your obligations, or want to be more proactive with your business finances, it may be time to get support from an experienced tax accountant.
At Spark Accountants, we specialise in working with small business owners across Brisbane. Our team offers tailored tax accounting, bookkeeping, and business advisory services to help you stay compliant, grow your business, and achieve financial clarity – all with upfront, fixed-fee pricing and no unexpected surprises.
Whether you’re lodging as a sole trader or navigating a more complex trust or company return, we’re here to help you make smart, strategic decisions.
Book your free discovery call today to find out how Spark Accountants can support your business success.
