If you are self-employed or run a small business, managing your taxes can be such a pain. However, it is vital to get your taxes under control to avoid facing costly penalties or paying more tax than you should. The sad truth is that most small businesses make tax accounting mistakes that cost them a lot in the long run.
Therefore, it is advisable to hire competent tax accountants to ensure you are handling your taxes correctly. Below are some common mistakes small business owners in Australia make while filing their taxes.
Making Inconsistent Declarations
The Australian Taxation Office (ATO) creates a benchmark with details of the band percentages that businesses within specific industries fall. If your business falls outside this band, the ATO will investigate the reasons for the declaration's inconsistencies.
Sometimes, however, the inconsistencies can be brought by justifiable reasons, such as personal reasons. Therefore, it is best to ensure that all your sales are declared and that you can justify any inconsistencies in your declarations.
After the end of a financial year, most SMEs have almost a whole year to prepare and lodge their tax work. That may sound like a lot of time, but many small businesses still fail to file their taxes on time. Any business that does not submit their returns on time incurs penalties, and the ATO might set an earlier due date for their tax work the next year.
Once you have a good bookkeeping process in place, it will not be difficult to lodge your business's tax returns. Therefore, get an expert to help you get your bookkeeping process in order.
Failure to Get the Status of Your Workers Right
It is vital to know your workers' employment status if you want to stay on the right side of the law. Most small business owners treat their permanent employees as subcontractors to avoid paying various expenses, such as payroll tax and superannuation.
However, any individual who works under your direct order, follows certain set hours, and does not bear financial risks for any work done, should have the privileges of a permanent worker. It is crucial to analyse each person you work with to ensure you get their employment status right.
It can be frustrating to face the consequences of avoidable mistakes in filing your business's tax returns. Therefore, it is always advisable to hire a tax accountant to handle bookkeeping and file tax returns. The experts understand all the laws surrounding filing tax returns and will ensure you don't fall on the wrong side of the law.