Whilst running your own business gives you the freedom to be your own boss and work your own hours, the ATO estimates that many find it difficult to meet their tax and superannuation obligations. The main reasons for this are because they lack time or resources, or have inadequate record keeping and business practices.
It is imperative that you keep the appropriate documentation up to date for your business. In doing so, the paperwork will provide you with a better understanding of your business’s financial position and outline potential weaknesses. Poor record keeping is a sign that the business owner may not be fully aware of how the business is performing and hence it is possible that the right business decisions are not being made to help the business grow.
The ATO now audits more and more businesses as they continue to expand their information-gathering capabilities to include more small business transactions, such as payments to contractors in the building and construction industry and capital gains from the sale of shares and property. The ATO will also reconcile the BAS and PAYG information with the end of year tax return and expect you to be able to explain any differences between them. If you are unable to satisfy the ATO with your reasoning, you leave yourself wide open to numerous penalties and interest.
To ensure you keep on the ATO’s ‘good side’ follow these tips:
- Stick to your deadlines by lodging all your tax obligations on time.
- If you have a negative attitude towards paperwork it’s time to change your attitude and get on top of things. If you are struggling to manage all the record keeping yourself it might be time to consider hiring a bookkeeper to manage the books for you.
- Get an accountant or tax lawyer to negotiate with the ATO if you are falling behind with your obligations or have outstanding debts. An accountant or tax lawyer has more experience in dealing with the ATO and greater rapport. A business owner may be emotionally loaded, which is not a good space to negotiate from.
Here at The Quinn Group, our Accountants and Tax Lawyers can negotiate payment arrangements on your business’ behalf. Contact us today by calling 02 9223 9166 or submit an online enquiry on our website at www.quinns.com.au.