"Approximately $16 billion is currently owed by small businesses to the ATO. "
Managing all the different facets of a business is a challenge. One area that is often neglected and in turn costly, is compliance and reporting with the government organisations like the ATO and ASIC.
The ATO is cracking down on owed tax debt and other bodies referring businesses to debt collection agencies and taking businesses to court. It is an imperative that small business owners know what they have to pay, when and to whom.
To shed some light on the topic, we spoke to Nick Urry from Dexterous Group - 2017 Australian Accounting Awards winner, to better understand tax and compliance obligations that small business owners should be aware of, best way to manage obligations and what do when you can't pay your tax obligations.Don't feel like watching the whole video? Check out each chapter of this Future Of Business episode here.
Tax and Compliance Obligations Small Business Fact Sheet
How can I manage my obligations?
- Delegate responsibility - make sure you are aware of these responsibilities but more importantly delegate responsibility. Your bookkeeper or Finance Manager should keep abreast of these obligations and monitor for any changes.
- Get organised - use a financial calendar to ensure you are aware of upcoming obligations. Know your due dates but more importantly set review dates in advance so you are prepared.
- Use technology - when managing obligations it is important to be proactive so you are not caught by surprise. Cash flow management tools such as Skippr give you a clear view of upcoming obligations using a simple cash flow dashboard. You input expected payment dates for your tax obligations once and then monitor your cashflow in real time so you never miss a obligatory payment.
- Get help from a professional - accountants such as Dexterous are well versed on these responsibilities and ensure you are prepared and compliant. Using an external accountant or bookkeeper is recommended when you are a small business as these responsibilities are a distraction to running your business. You need to look at the opportunity cost. How much is your time worth? Your time is best spent growing your business not managing tax and compliance.
I can’t pay my tax obligations now. What do I do?
You can’t pay your tax. Don’t worry, many businesses are in the same boat. The ATO can usually accommodate businesses with late tax payments if they have a good reason for not paying on time. If your business is struggling to meet its tax and compliance obligations, you may be able to negotiate a payment plan or other means of paying the overdue amount with the ATO. Once this payment plan is fulfilled, you may even be able to remit any interest that has been accrued. Keep in mind, “I forgot” or “I didn’t know” might not be good enough to negotiate payment terms. The NSW State Revenue Departments also currently offer extended instalment plans to help small businesses meet their obligations without financial strain.
We hope this has helped get you up to speed with the tax and compliance obligations faced by small business in Australia. Remember, not meeting your obligations as a small business owner may result in penalties that will impact your business negatively in the long run and may be hard to bounce back from. Some of the stress on small business owners can be taken off with the help of smart financial planning using tools or professional agencies. Finally, we’d like to again thank Nick Urry from Dextrous Group for appearing in this episode, and thank you for reading this instalment of the Future of Business!
Check out the video chapters and full episode here.