Running a small business requires balancing many responsibilities, including payroll management, tax compliance and delivering high-quality products or services to clients. Despite these efforts, recurring tax errors are frequently observed each year. Here are five common issues we see and tips to avoid them.
1. Mixing Business and Personal Expenses
It’s an easy habit to slip into but it leads to messy bookkeeping and inaccurate deductions. Keeping a dedicated business bank account and using accounting software to classify transactions saves time, maximises accurate deductions and reduces audit risk.
2. Misunderstanding GST Rules
Common pitfalls include incorrectly claiming GST on non-GST supplies, not registering when hitting the $75,000 turnover threshold and failing to lodge BAS on time. Reviewing how your business is tracking, especially in the startup phase, at least quarterly can help you to avoid tax compliance risks.
3. Incorrect Treatment of Asset Purchases
After temporary full expensing ended in 2023, only business equipment purchases under $20,000 (GST exclusive) can be immediately deducted in the 2026 financial year. Asset purchases above this amount go into a small business depreciation pool, allowing a 15% deduction the first year and 30% in subsequent years.
4. Not Paying Yourself Properly
Owners will often pay themselves ad-hoc, which can lead late superannuation payments, Single Touch Payroll (STP) reporting compliance issues and difficulties securing personal finance. By simply setting a structured salary and processing owner wages through payroll accounting software this can often be avoided.
5. Not Paying Superannuation on Time
Starting 1 July 2026, employers will be required to pay employees superannuation guarantee contributions (SGC) within 7 days of each pay. Employers will face interest charges and penalties for any late payments, as well as losing the tax deduction for all late SGC payments. Reviewing payroll systems and ensuring they are adequately set up for these new rules is vital for business owners.
6. Using the Wrong Business Structure
Many business owners stick with their initial structure, often a sole trader or partnership setup, which may lead to higher taxes and personal risk. Choosing the right structure should balance tax efficiency, asset protection and future goals. A brief chat with an advisor could help you save on taxes and protect your assets.
By Jake Curran, Supervisor, Business Services
