The Australian Tax Office (ATO) can demand to do a tax audit on your company. Tax audit is a normal process for businesses, even those that are free of tax issues. Hence, if you have proof of adhering to tax regulations, you need not fear. All you'll do is present the receipts and filing documents.
However, it is common for companies to file returns that they can't support fully. To be free from ATO's troubles, engage tax accountants and avoid the following mistakes.
1. Failing to Track Tax Law Changes
It is vital to keep updating yourself with changes that take place with tax laws. Otherwise, you may end up underpaying your taxes or miss out on the payment deadlines, which might earn you a penalty. Working with a competent tax accountant and investing in tax update webinars keeps you up to date with relevant tax information.
2. Treating Workers as Subcontractors
It is common for some companies to treat workers as contractors, yet they are employees. Employers do this to evade certain responsibilities, such as payroll taxes and employees' sick leave and holiday pay, among other entitlements.
ATO's guidelines recommend that workers are considered employees when they work under an institutions' direction and control, including operating standards and hours. By treating your employees as subcontractors, you are going against the ATO guidelines, and you can earn penalties and land in lawsuits. Thus, you should seek to understand the definition of an employee and a contractor as per the ATO guide. A proficient tax accountant will help you fulfill your employment obligations.
3. Failing to Record Sales Through a Cash Register
In most cases, small retail ventures fall victim to the habit of not recording sales in a cash register. Every business should record all its transactions, whether revenues or expenses. Another common problem is taking cash from the sales for personal use and failing to record it for reconciliation.
4. Failure to Use a Tax Agent
Many small businesses are crippling due to a lack of tax knowledge. There is a tendency for small business owners to feel that they are earning too little to file tax returns. But, this ignorance ends up costing their venture in the future when the tax department pursues them. However, when you engage a tax accountant, you will not make uninformed decisions since they will advise you every step of the way.
These four mistakes can cost your business, hence the need to avoid them. The best way to avoid them is by acquiring a better understanding of business taxation through a trained and experienced tax accountant.
Hello. When you are at school, maths can seem so complicated at first. But then you learn about numbers and all of sudden everything seems as easy as 2 + 2 = 4. I used to be pretty good at maths so when I started my own business, I didn't think I needed to hire an accountant. After all, why should I pay someone else to do something that I could do myself? However, I very quickly learnt two important lessons. Lesson one was that accounting and doing the books will take a lot longer than you might think and, secondly, it is actually pretty complex stuff. In the end, I decided to hire a professional accountant. He is great and he has taught me a lot of cool stuff.