The main types of taxes that businesses might need to pay include:

• Income Tax: Based on the net profits of the business.
• Goods and Services Tax (GST): If your annual turnover is above a certain threshold, you need to register for and charge GST.
• Payroll Tax: A state tax assessed on wages paid by employers when their total wage bill exceeds a threshold.
• Capital Gains Tax (CGT): Payable on the profit from the sale of business assets or shares.
• Fringe Benefits Tax (FBT): Tax on certain benefits employers provide to employees or their associates.

Businesses can claim deductions for most costs involved in running the business, including:

• Operating expenses (e.g., utilities, rent)
• Business travel expenses
• Staff wages and superannuation contributions
• Marketing and advertising costs
• Depreciation on business equipment and vehicles

You should maintain accurate records of all financial transactions related to your business, including:

• Sales and income records
• Expense and purchase records
• Payroll records
• Bank statements and financial statements
• Asset purchase and depreciation schedules These records should generally be kept for at least five years.

The key distinction lies in the nature of the work arrangement:

• Employees work in your business and are part of your business.
• Contractors run their own business and provide services to your business. The classification affects how you handle tax withholdings and payments (such as PAYG withholdings and superannuation).