Australian Taxation Office Mistakes Small Business Should Know
No matter where you are in the world, we can all agree that taxes are incredibly complicated. Australia is no different and known to have the highest rates of tax agent dependence. Because of these complexities, many end up making tax mistakes that build risk in their profile, affecting their business and directors.
With that being said, it's best to prevent these mistakes from happening in the first place — but how do you do that?
Exploring ATO Mistakes in Australia
One of the best ways to combat ATO mistakes is by working with a reliable small business accountant to ensure you don't miss any deadlines, follow tax regulations, and stay updated with the latest news regarding taxes.
If you want to avoid making ATO mistakes, keep reading. Here are some of the most common Australian taxation office mistakes you should avoid:
Mistake #1: Late Lodgements
One of the most common and easiest mistakes to make is submitting late lodgements of Business Activity Statements and Income Tax Returns. There could be a million reasons you could forget to pass these documents, such as having a busy schedule, forgetting to push the submit button, or if you're simply waiting for more information before sending out the paperwork.
When you experience late lodgements, this means that you don't have a proper tax system to follow, and you have no control over your accounts. And with that, when you're consistently late, the ATO may intervene.
This is why it's important to work hand-in-hand with your small business accountant to ensure that you hit the deadline. You can do this by cooperating with your accountant by providing all the necessary information and documents you need, such as bank statements, receipts, financial reports, and more.
Remember — you don't want the ATO to intervene since it can put risk in your business, giving you more issues to deal with, such as penalties.
Mistake #2: Making Late Payments
When you make late payments, it's an obvious sign that your business is in awful financial shape or that you have a sloppy payment scheme. When this happens, you end up adding another mark to the risk profile the ATO is building regarding your business and directors.
Late payments dampen the reputation of your company and show that you have difficulty establishing a payment arrangement and that you can't meet business payment deadlines. With that, it's important to know your financial health and to budget accordingly to ensure that you meet payment cut-offs regularly.
Mistake #3: Having Employee Contributions Without Fringe Benefits Tax Registration or Fringe Benefit Return
Another common mistake is when a business pays for goods or services that aren't 100% for company use. With that, you can't claim a tax deduction for non-business use, so what should you do? In some cases, the accountant will have to do cash-outs to help reimburse these expenses. Other times, these businesses will label this income item as "employee contributions”.
Although this will do fine from an income tax perspective; however, when it comes to Fringe Benefit Tax implications, it cannot be ignored. This is because if you're providing benefits to your employees, you need to register these under FBT and file for the annual Fringe Benefit Return.
When you don't submit an FBT return, the ATO will have to review your FBT liabilities, obligations, calculations. For this reason, it's imperative that you prepare your FBT returns with your small business accountant.
The Bottom Line: Small Business Accountants Can Help You Dodge These Common ATO Mistakes
As mentioned earlier, there's no denying that taxes are incredibly complicated. And with that being said, working with a small business accountant can help you deal with tax-related issues and concerns, keeping you away from the eyes of the ATO.
How Can We Help You?
If you're looking for a small business accountant on the Gold Coast, you've come to the right place.
Our firm provides end-to-end accounting and bookkeeping services that help you scale and grow your business. Working with more than 600 businesses across various industries, we have experience in creating tailored solutions for every client.
Learn more about how New Wave Accounting can help you today!