Many small business owners do not have time to make arrangements for their finances when tax season comes around. What if you could make this time easier and more profitable? If you had done some planning of your own and understood the tax deductions entitled to small businesses, you would have minimised your taxable income, thereby saving more money.
This guide will present the most essential tax deductions for a small business, help you avoid costly mistakes, and discuss when small business tax accounting assistance may be worthwhile.
A tax deduction serves as a tax write-off for business expenses you can subtract from your taxable business revenue. The Australian Taxation Office (ATO) accepts this deduction to reduce your taxable income while decreasing your tax burden.
The ATO will recognise an expense as deductible only when it fulfils three specific requirements.
Your financial position will improve dramatically when you recognise ATO business deductions regardless of your status as a sole trader, partnership member, company or trust owner.
Let’s explore the most common and impactful small business tax deductions in 2025:
The following represents some common business expenses that are fully deductible by a tax accountant for small business:
The ATO authorised two methods for vehicle expense deductions: either the cents-per-kilometre method or keeping a logbook to substantiate your claims.
The total costs of advertising along with promotional activities, including both social media advertisements and website design and search engine optimisation (SEO) and printed materials, have complete deduction potential.
Payments to employees and contractors, as well as superannuation contributions you make on your behalf (if self-employed), are deductible as business expenses.
This list can help you determine which business expenses you may claim against a given business income, thereby reducing your taxable income.
Fees paid to your small business accountant in Perth or bookkeepers are tax-deductible and can include professional accounting services such as BAS lodgements, tax return preparation, and financial advice.
Tools like Xero, MYOB, Adobe Creative Cloud, and CRM software are completely deductible if used solely for business.
Courses or programs that lead to improvements in your business are tax-deductible expenses.
For home office businesses, it is possible to claim a portion of internet bills, phone costs, home office equipment, and electricity for business purposes. The fixed-rate method for 2025 is $0.67 per hour relating to energy, internet, and phone costs (ATO).
Assets such as machinery, laptops, and office furniture can be depreciated throughout their useful life.
Fees paid for planning taxes with the help of an expert and for high-level business financial advice are deductible.
In order to get maximum deductions on taxes, special planning should be done ahead of time to ensure that all these deductions are fully workable. Here are some business accounting strategies:
Bookkeepers for small businesses that you trust will help keep your records accurate and current for your small business. You can use an expense-tracking app such as Expensify or Hubdoc.
To clearly separate business and personal finances, have separate bank accounts for the business that will allow for easy tracking and monitoring of transactions.
If applicable on a claim till 2025 for an amount of up to $20,000 for small businesses, the instant writing-off that the ATO offers should be fully utilised for the immediate deduction of any asset and cash flow benefit.
To enhance your deduction for expenses, consider prepaying certain expenses such as rent and subscriptions for up to 12 months so that you can claim in the current financial year.
The experienced professionals providing bookkeeping services for small business work with small business accounting to ensure proper record-keeping for tax compliance, thus reducing the risk of errors that may trigger an audit.
While some business owners can be as honest as they come, mistakes are still made with business expense deductions, and such errors should be avoided. Here are just a few pitfalls:
Deduct only expenses incurred directly to your business income. Even if you occasionally use it for work, personal purchases such as a new television bought for your living room cannot be claimed as a business deduction.
According to ATO, the record keeping for tax purposes lasts for at least five years. Use digital tools and backup systems to keep your invoices, receipts and contracts organised and secure.
Follow the strict ATO guidelines: Only claim space and utilities directly attributable to conducting business from a home office.
Remember to depreciate significant purchases over time. Neglecting this step could mean missing out on substantial deductions.
In the absence of professional training, you may end up missing out on tax breaks for small businesses or making mistakes that would be penalised. Consider hiring a professional and get good advice for timely compliance with tax obligations.
Running a small business is no child’s play; you are often put in a position to juggle many duties. Tax planning for small businesses should not add to stress, particularly if it might interfere with compliance or profit. The following are a few situations when hiring a small business tax accountant or registered BAS agent is something you should consider:
Palladium Financial Group offers trusted accounting services to equip your business for success, whether through small business bookkeeping tips or quarterly BAS lodgements. We provide expert assistance all year round so that tax time is never overwhelming.
Trivial as it may sound, learning about and using the proper tax deductions for your small business is a fantastic way to operate a more successful business. When you keep good records, collaborate with experienced bookkeepers, and listen to strong tax advice from a certified small business tax accountant Perth, you can intelligently manage your tax obligations and turn these into business advantages.
You shouldn’t leave everything until June 30 to rush through your receipts. Instead, this is where planning comes into play, and we at Palladium Financial Group, experts in small business accounting and tax strategies, are your go-to solution.
Book a consultation with Palladium Financial Group today!
Copyrights © Palladium Financial Group 2025
