Small businesses have been reminded to report all their income, claim all their deductions and lodge on time.

The ATO has shared a range of tips to make it easier for small businesses to pay their tax this year.

The small business tax tips include:

  • Report all your income
  • Claim all your deductions
  • Check for personal services income
  • Simplify depreciation
  • Lodge on time

Report all your income

Small businesses need to report all the income they earned in 2015-16, including cash sales, online sales and income earned in the sharing economy.

“If, for example, you are renting out a room, a car parking space, doing odd jobs such as delivery or cleaning for a fee, or driving passengers for a fare, remember to include this income in your tax return,” according to the ATO.

Claim all your deductions

The ATO has reminded small businesses that they can claim tax deductions for most costs incurred while running their business.

Operating expenses such as office stationery and wages can generally be claimed in the year they’re incurred.

However, capital expenses such as buildings, machinery and equipment are generally claimed over a longer period of time.

Small businesses that work out of home can claim deductions for a portion of the costs of owning, maintaining and using the home for business – but there must be an area set aside exclusively for business activities.

Small businesses may also be able to claim home-based running costs such as phone calls, heating, air conditioning, cleaning and decline in the value of furniture.

“There are some important exceptions you need to be aware of,” according to the ATO.

“For example, you cannot claim deductions for private or domestic expenses. You should be aware that entertainment, fines and some other expenses are also specifically excluded from business-related deductions.

“You must also remember to keep accurate and complete records of all the assessable income and business deductions you claim.”

Check for personal services income

The ATO has also reminded small business owners that special tax rules may apply to personal services income.

“If you are self-employed and paid mainly for your personal efforts, skills or expertise, you may be earning personal services income,” according to the ATO.

Simplify depreciation

The ATO has created simplified depreciation rules for small businesses that have a turnover of less than $2 million.

“One of the simplified depreciation rules is the instant asset write-off. The instant asset write-off means you can immediately deduct assets bought for your small business, which cost less than $20,000 in the year that you buy and use them, or install them ready for use,” according to the ATO.

“Besides the instant asset write-off, another important rule to remember is that if the balance of your pool for depreciating assets is less than $20,000, before applying any other depreciation deduction, you will need to immediately deduct the full amount in your tax return.”

Lodge on time

Finally, the ATO has reminded small businesses of the importance of lodging on time.

Small businesses that prepare their own tax return must lodge by 31 October.

Small businesses that have employes must lodge their PAYG payment summary annual report by 14 August.