When it is nearing the end of the year, things become pretty busy for small business owners who need to plan out actions so they can cut their taxes significantly before the tax year actually closes. Tax Depreciation is something that requires the use of effective planning tools, to take actions so you can benefit from the tax breaks, and to recognize the changes so you can revert to the most effective ways to keep up. Don’t worry, there are available strategies that could help minimize your tax liability while keeping your financial house in perfect order.
Confirm your Small Business Stature
One of the first things you need to do is to quantify your assets and liabilities and see if you actually qualify as a small business entity.
Small businesses must have an aggregated turnover of $2 million or less for the previous income year as well as for the current income year. Why is it important to qualify as a small business entity? Doing so will allow you access to several tax concessions, which will help lower your tax liability considerably.
Be Aware of Tax Concessions
Sometimes, it takes more than just some knowledge on rules that are yielding for small business owners to get away with less tax liability. You have to know the tax concessions by heart so you can plan out your financial year well enough.
Nothing is probably more complex than the world of taxes. The only way you can get around the drill is to learn how you can bend some rules a little so they turn in your favor. It is important to know what is depreciation and how it can be meaningful for your business.
Depreciation is basically the art of lowering your liability as much as you can to reduce the amount you need to cough up at the end of every financial year. This has a lot to do with knowing the tax provisions and concessions that are favorable to you to avoid actions that may hamper your chances.
One thing you must understand is how the simple depreciation rules actually work. Together with a reliable depreciation calculator, you can immediately determine where you can claim immediate deductions.
For example, your assets that are valued at $6,500 will be deductible immediately. If you asset is valued at more than that amount, you can still apply for a depreciation, given that it comes in one pool of assets that are expected to depreciate at a 15% rate on the first year and 30% on the succeeding years.