Is Your Small Business Setup Costing You More in Tax?

10 Sept

Why your current structure could be draining your profit, and what to do about it

You work hard. You get up early, deal with clients, chase payments, and finish the job even when the weather turns or things go sideways. So when tax time rolls around and you get stung with a bill that feels way too high… It’s frustrating.

If you’re a small business owner or sole trader in Windsor, Richmond or nearby Penrith, there’s a good chance your business structure or accounting setup is quietly costing you more than it should.

At Bold Accounting, we speak with heaps of hardworking tradies and small business owners who say the same thing:

“I think I’m paying too much tax.”

And 9 times out of 10, they’re right.

1. Your Business Structure Might Be Working Against You

Let’s start with the basics: how your business is legally set up has a significant impact on your tax liability.

Sole trader

Simple and cheap to start, sure. But once you’re earning a solid income, the cracks start to show. You’re taxed at individual rates, which means paying up to 47% if you’re doing well. There’s no income splitting, and your personal assets (like your house or ute) are on the line if something goes wrong.

Company

Offers a flat tax rate (25–30%) and protection of personal assets, but it comes with higher compliance and admin costs. Still, it can work better if you’re growing, bringing in bigger clients, or planning to reinvest in your business.

Trust

A bit more complex, but handy for tax flexibility and asset protection. A trust can distribute income to family members with lower tax rates but only if it’s set up and run properly.

If your business has grown since you started, but your structure hasn’t evolved with it, you could be paying thousands more in tax than you need to.

2. You’re Missing Deductions (Without Realising It)

Here’s a common story:

You hand your receipts over to your tax accountant in June. They punch in the numbers, lodge your return, and you pay your bill.

What’s missing?

Strategy. Timing. Advice.

Too many business owners leave it until tax time to react, when smart tax planning should be happening before the end of the financial year. We’re talking about:

Timing equipment purchases and expenses
Bringing forward deductions
Making personal contributions to super
Structuring loans or vehicle purchases properly
Using the right mix of salary, dividends or trust distributions

If your accountant isn’t walking you through these before June 30, you’re missing out.

3. Outdated Systems Mean You’re Flying Blind

Still tracking receipts in a shoebox or manually updating a spreadsheet once a month?

That’s not just annoying; it’s expensive. Here’s why:

You can’t make real-time decisions if you don’t know your numbers
You may be missing GST claims or double-paying suppliers
You’re more likely to make errors that trigger ATO red flags

Modern cloud accounting systems like Xero give you up-to-date financials, easy reports, and bank feed tracking and let your accountant spot problems before they become expensive mistakes.

(And no, you don’t have to be a “techy” to use them, we set up and train clients so it’s simple.)

4. You’re Getting Advice That’s a Year Too Late

Your accountant should be part of your business, not someone you hear from once a year. If the only time you chat is at tax time, you’re not getting real support.

The cost of reactive accounting?

Missed BAS or PAYG payments (hello penalties)
No planning for how to reduce your tax
No guidance when opportunities pop up
No structure review when you start growing or take on staff

Good accountants help you run your business better and not just keep the ATO happy.

5. You're Treating Tax Like a Once-a-Year Problem

Tax should never be a surprise. It should be built into how you price your jobs, pay yourself, and manage cash flow.

When you don’t plan for it:

You scramble to pay a big tax bill at once
You delay your super or BAS (which causes interest or fines)
You never really feel like you’re ahead, even if the work is flowing in

A better setup means you’re planning for tax, claiming everything you’re entitled to, and getting advice throughout the year.

6. You’ve Outgrown Your Setup, But Haven’t Adjusted

Most small businesses start as sole traders. It’s simple, cheap and gets the ball rolling. But fast-forward 2–3 years, and if you’re still trading as a sole trader while pulling in $150K+ in income? You’re leaving money on the table.

That structure might’ve been perfect when you were just starting out. But now? You’re potentially:

Paying higher tax rates
Missing out on super strategies
At risk personally if anything goes wrong

We regularly help clients change structure without triggering tax problems using the right rollover and capital gains exemptions.

What We Do at Bold Accounting

At Bold Accounting, we work with small business owners and sole traders across Windsor, Richmond, and Penrith, NSW, to make sure they’re not just compliant but set up for growth and success.

We take a hands-on, year-round approach:

We review your current setup and show you where you could be saving tax
We manage your tax returns, BAS, and compliance without the stress
We help you switch structures safely if needed
We keep your books clean, automated, and up to date
We show you how to plan ahead so tax time doesn’t bite

But more than that, we become your trusted financial sounding board. Our clients don’t feel alone when it’s time to make big business decisions. They’ve got someone in their corner who understands the numbers and the local landscape.