Last year, the Australian Taxation Office’s Serious Financial Crime Taskforce made five convictions, 421 audits, raised liabilities of $190.89 million and collected $99.79 million. On top of this, it believes there’s $3 billion in missing revenue across Australia because of poor tax reporting or evasion.
That’s a massive amount to be missing for a process that should be a priority for all businesses. As a result, the ATO is randomly auditing small and medium businesses – what will they find when they come across your books? Even honest mistakes or simply lax bookkeeping can incur the wrath of the ATO.
Today, we’re going to discuss a few of the common errors that SMEs are prone to making so you can avoid the hassle of landing in hot water with the ATO after the fact.
Failure to keep returns or records
Without good business records and statements, you don’t just run the risk of having the ATO on your trail – you won’t even be able to effectively run your business or plan for growth. You should, at the very least, have some basic bookkeeping and keep the following records and receipts for five years:
- Sales receipts
- Purchases / expenses
- Travel/transportation
- Assets
- Wages and employment records
Making false or misleading statements
You shouldn’t be making any guesses or estimates on your income and expenses when you are filing your taxes. If you estimate incorrectly then you run the risk of looking like you are purposely falsifying tax information, which could result in much more serious consequences. Every business should use a qualified bookkeeper for their business bookkeeping to make sure everything is up to a high standard of accuracy.
Don’t get caught up in a criminal tax offence inadvertently – exercise care and due diligence with your record keeping and filing of reports with the tax authorities.Understanding your limitations
While you may be great at promoting and running your business, filing accurate tax returns and maintaining accurate bookkeeping is a different set of tasks that you may not excel at. While that’s fine – not everyone is a professional accountant – you have to recognise when you are out of your depth.
Here at Accountants Australia we’ll ensure your taxes get done to the highest standards.
Understanding when certain bookkeeping or taxation tasks are beyond your area of expertise and hiring a professional to do them for you can save you time, long-term money, and the ire of the ATO. You’ll make your business run more smoothly and have a clearer financial road map for the future.
When you don’t have to worry about keeping an eye on your finances, you can focus on the core value of your business knowing that your money is in the hands of professionals. Contact our team here at Accountants Australia and we’ll ensure your taxes get done to the highest standards.
