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What Is Qualified Business Income And Why Is It Crucial To Small Business Owners?Qualified Business Income refers to earnings from a business or trade. This income is typically taxed on your individual income tax return as ordinary income. In Australia, all tax deductibles by small businesses keep changing every year. Therefore, small business owners must know where they can reduce their tax liability. This is applicable to sole traders, partnerships, trusts and corporations. This income is categorised differently and does not include wage earners’ income, income generated from investment portfolios, dividends, capital gains and losses, and others that do not come directly from business activities. Qualified Business Income only refers to business owners if they are actively running their business, being involved in the workflow, and expecting to create profits. Business owners who are silent partners do not qualify. The Australian Taxation Office (ATO) gives tax cuts to businesses with incomes lower than 5 million dollars. They offer an offset of up to 1000 dollars per year. The exact amount depends on the business income. Small businesses can benefit from these in multiple ways. Business owners can save a considerable amount on taxes, on taxable income and most importantly, they can keep a larger share of the profits earned. Accountants can help your businesses save a lot on taxes following all taxation guidelines set by the ATO. While you may have good accounting skills to handle budgeting and bookkeeping, an accountant can do these things for you in a much more efficient manner. Moreover, small businesses should focus their energy on growing their business rather than worrying about taxes and tax implications of qualified business income. ATO provides various other benefits to small businesses such as
Consider MAS Partners For Your Small Business Accounting Needs Our small business accountants in Sydney and Zetland can do a lot more than file taxes for you. They can provide other services such as bank reconciliations, cash flow analysis, budgeting, Key Performance Indicators Analysis and financial reporting. To find out more about us, click here. |