Running a business in Australia means you must meet a range of tax obligations. These include keeping records, reporting income and paying tax on time. If you miss a step, it can lead to fines or delays. The good news is, with the right tools and planning, managing your tax can be simple, clear and stress-free.
Tax obligations cover a business's key duties, like tracking income, claiming deductions and lodging returns. You must keep records, pay tax on time and report GST, PAYG and super. Your business structure affects how much tax you pay and how you report it.
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Keeping clear and complete business records is one of the most important things you can do to stay tax compliant. It helps you report correctly, track your performance and make better decisions. It also saves time when it's time to lodge your tax return or a business activity statement (BAS).
The Australian Taxation Office (ATO) requires you to keep records that explain your business income and expenses. You must keep these records for at least five years. Failing to do this can lead to penalties and delays when you need to lodge.
Good record keeping also helps with:
Each industry has slightly different tax records to maintain. For example:
Keeping your records digital makes them easier to organise and harder to lose.
TypeHow long to keep itTax returns and assessments5 yearsInvoices and receipts5 yearsPayroll and super records5 yearsBAS and GST records5 yearsDepreciation recordsLife of asset + 5 years
Your business structure affects how much tax you pay and what records you need to keep. It also decides your legal duties and how you report to the Australian Taxation Office. Picking the proper structure helps you meet your tax obligations and plan ahead with fewer surprises.
Each business type has its own tax requirements and rules. These affect how you lodge a tax return, pay income tax, and report business income and expenses.
Here’s a quick look at the main structures:
StructureTax rateWho lodges the returnOther tax pointsSole traderIndividual tax ratesOwner (as part of individual tax return)Can claim tax deductions for business expensesPartnershipIndividual tax ratesEach partnerMust lodge a partnership returnCompany25–30% (flat)CompanyMust lodge a company return, pay company tax, may be liable to pay payroll taxTrustVariesTrusteeComplex, may need a registered tax agent
If you're a sole trader, your personal and business income combine. You report it in one individual tax return. But a company is a separate legal entity, which means you must keep separate business records and may be responsible for paying company liabilities.
Many business owners start as sole traders but choose to switch to a company structure as their income and responsibilities grow. This change can lower tax liability, improve access to deductions and reduce personal risk when hiring staff.
The shift to a company can help you:
If you’re a sole trader or run a small business, you have simple but important tax duties. You need to track your income, report expenses and meet deadlines. You also need to lodge a tax return that includes your business income and any personal earnings.
A sole trader runs a business as an individual. You’re personally responsible for paying all taxes on your income. You must lodge an individual tax return every year. It includes both your business and personal income.
You may also need to:
You can claim a deduction for most costs that relate to running your business. These may include:
These deductions reduce the amount of tax you need to pay.
Use this quick checklist to keep your tax affairs on track:
Every business must understand its income tax duties. Income tax is the money you pay on the profit your business makes. Your business structure affects how much you pay and how you report it.
If you're a sole trader, you include your business income in your individual tax return. If you're a company, you must lodge a separate company tax return. Each type of business has different rules and tax rates.
Understanding your rate helps you plan and avoid underpaying.
Entity TypeHow Tax Is PaidCurrent Rate (as of 2025)Sole traderVia personal income tax0%–45% (marginal)PartnershipPartners pay personal tax0%–45% (each partner)CompanyPays company tax25% (base rate), 30% (others)TrustDepends on distributionVaries
Check if you're required to lodge based on your income. The ATO will automatically send you a BAS or reminder to lodge a return if you meet the threshold.
Lodging your tax return on time is vital for staying compliant. Whether you're a sole trader, company or trust, you must report your income and claim any deductions correctly. Mistakes or delays can lead to audits or penalties from the Australian Taxation Office.
Your business tax return must show:
If you’re both an employee and a business owner, include your income in your individual tax return.
You must lodge your return by 31 October unless you use a registered tax agent. If you lodge late or leave out income, you may be liable to pay penalties. The ATO may apply interest on unpaid tax and issue fines.
The ATO will also automatically send you a BAS if you're required to report business activity. You need to lodge this even if you have no activity to report.
Use this quick list to get ready:
Claiming the right tax deductions helps reduce the amount of tax you need to pay. If you run a small business, knowing what you can deduct can save you thousands each year. To claim, your expense must relate directly to earning business income.
A valid deduction is an expense that:
You can't claim costs like fines, personal groceries or your entire home rent unless part of your home is set up for business. You must also keep records of every claim.
Here are typical deductions for different business types:
Business TypeCommon DeductionsReal estateMarketing, listing fees, car use, mobile phoneHealth servicesEquipment, software, uniforms, insuranceConsultingHome office, internet, travel, trainingRetailStock, POS software, packaging, storageTradesTools, fuel, ute lease, safety gear
These costs must meet ATO rules and be supported by strong record-keeping.
Good tax planning happens all year. You can’t wait until the end of the financial year to get organised. By spreading out your tasks and setting reminders, you can stay ahead and avoid last-minute stress.
A tax calendar helps you track key lodgement dates. It reminds you when you must lodge a return, submit a business activity statement, or make a payg instalment. It also helps with superannuation payments and any payroll tax deadlines.
Key dates to track:
Use alerts to stay on top of these. You can set reminders on your phone or in your accounting software.
If you run a small business, review your records mid-year. Check your income, costs, and what you’ve claimed. This helps avoid surprises and gives time to plan.
Stay ahead with this simple list:
If your business is registered for GST, you must send a business activity statement (BAS). This form tells the ATO how much tax you owe or are owed. Most businesses send this form every quarter.
Staying on top of your BAS and quarterly business activity keeps your tax affairs in order. It also helps you avoid fines and interest.
Your BAS helps you report and pay:
Field NameWhat It CoversGST on salesThe goods and services tax you collectedGST on purchasesGST credits you can claimPAYG withholdingTax withheld from employees’ wagesPAYG instalmentsPrepaid tax on your incomeOther obligationsLuxury car tax, fringe benefits tax, wine tax
The ATO uses your business details to decide your cycle. If you're due to lodge quarterly, the ATO's system will automatically send you a BAS.
If your income changes, you may need to vary your instalment. For example, if your sales drop in one quarter, you might pay less tax.
You can vary:
Paying your tax on time is a key part of running a business. If you miss a deadline, the ATO can charge interest or apply a fine. Staying organised helps you stay on track and avoid stress.
To pay tax on time, you need to plan. Use simple steps to stay in control:
If you make regular payments through payg instalments, keep a record of what you’ve paid. This helps avoid overpaying or underpaying.
If you're late, the ATO may:
Even if you can’t pay the full amount, you still need to lodge on time. This shows you are meeting your tax obligations.
Keeping cash flowing helps ensure you always have money for tax. Try these ideas:
If you run a business and employ people, you must meet both tax and superannuation obligations. These include paying the right amount of super for your staff and reporting tax through the right channels. Staying on top of these tasks is key to avoiding fines and staying compliant.
As an employer, you’re responsible for paying:
You must also report and pay these amounts by their due dates. Missing deadlines can lead to interest and penalties.
The super guarantee is the minimum super amount you must pay to your employees. The current rate is 11.5% of their ordinary time earnings. From 1 July 2025, this rate will increase to 12%. You must:
You must also keep records and include these payments in your reports to the ATO.
Here’s a quick list to help you manage your superannuation obligations:
A tax agent can help you manage your business taxes with less stress. They understand tax laws, know what to claim and can guide you through complex reporting. If your business is growing or your tax affairs are getting harder to manage, it might be time to get help.
You may want to work with a registered tax agent if you:
If you use a registered tax practitioner, you also get more time to lodge a tax return.
A tax agent can:
They also help you understand the rules that apply to sole traders and companies, so you can make smart choices.
Working with a tax agent helps you stay ready for the ATO. You can lodge an income tax return, BAS or other forms with confidence. It also helps you keep up to date and avoid mistakes before they become costly.
Key tax obligations include registering for an ABN, keeping accurate tax records, lodging BAS or IAS if required and paying income tax or PAYG instalments. You must also meet superannuation and payroll tax rules if you have employees. Staying organised and up to date helps you avoid penalties and stay compliant.
You must lodge a tax return each year if you earn income above the tax-free threshold or run a business. Sole traders include business income in their individual tax return. Companies and trusts must lodge separate returns. Using a registered tax agent gives you more time to lodge.
To lodge an income tax return, gather all your business records, report your income and claim any valid deductions. You can lodge it yourself through the ATO’s online services or use a registered tax agent. Keeping your records organised makes the process faster and helps reduce errors.
You need to keep records that show your income and expenses. These include receipts, invoices, bank statements, payroll records and BAS. Keep all records for at least five years. Staying organised helps you meet your reporting obligations and makes tax time much easier.
Yes. If you run a company or trust, you must keep business records separate from personal ones. This applies to income, expenses and super payments. If you're a sole trader, you should also separate your accounts to track business income clearly.
A quarterly business activity statement is a form used to report GST, PAYG and other taxes to the ATO. If you're registered for GST, you must lodge it every quarter. The ATO sends it based on your reporting cycle, and it helps track what you owe or can claim.
Stay ahead with smart tax tools that make managing your tax simple. With early planning, clear records and the right software, you can save time, avoid fines and reduce stress. Business Kitz helps you track income, organise records, set reminders for BAS, super and PAYG, and work seamlessly with your tax agent. Whether you're just starting, growing a team, or needing advanced features, Business Kitz gives you the tools to stay compliant and control your business's future.
