Business owners need to declare any business income earned. Deductions can be claimed for some expenses incurred in running a business.

Sole traders, partnerships, companies and trusts have different legal obligations and are taxed differently. Professional advice should be obtained on what structure to choose and the ATO or your Accountant/tax adviser can advise how tax applies to the chosen structure.

Partnerships, companies or trusts must have a business tax file number. Sole traders can use a personal tax file number for the business.

Businesses are not required to have to have an Australian Business Number (ABN), however it will help to register for GST and other business tax obligations. For example, if your business chooses not to have an ABN, businesses you deal with can withhold 46.5% of payments due to you under pay as you go (PAYG) withholding.

There are specific rules for calculating business related expense claims for home-based businesses. Note however that the capital gains tax exemption that normally applies to your home can be adversely affected.

Businesses may be eligible for a range of tax concessions if turnover is less than $2m a year.

Keeping good records makes it easier to prepare and submit tax returns. In general, business records must be kept for five years, by law.

Keeping records electronically will save the business time and improve accuracy. There are a number of commercially-available software packages. The ATO provides free electronic record keeping software called e-Record.