Tax season can be a stressful time for business owners. Not only do you have to gather all your paperwork and receipts, but you also have to make sure you're filing your taxes correctly. If you make any mistakes, knowingly or otherwise, you could owe a lot of money in penalties. But don't worry — if you catch yourself making any of these errors, it's not too late to fix them!
Discover the five biggest tax mistakes business owners make and how to avoid them.
Not Keeping Good Records
One of the most important things you can do for your business is to keep good records. This includes everything from keeping track of your income and expenses to maintaining your inventory records. Good record keeping will help you stay organized and will also make it easier for you to prepare your tax return. If you don't have good records, you may end up paying more tax than you owe –– or worse, being audited by the ATO.
An audit is time-consuming and expensive, and it can also result in you having to pay fines or penalties if the ATO finds anything amiss in your tax return.
To avoid this mistake, make sure you keep track of all your income and expenses. You can use a simple spreadsheet or accounting software. Be sure to record every transaction, no matter how small. And if you're ever audited, having good records will help you prove that you've paid the correct amount of tax.
But if you're not sure where to start, you can speak to a tax accountant. They can help you set up a system that will work for your business, and make sure you keep track of the right information.
Failure to Understand Tax Laws
Another mistake business owners make is failing to understand tax laws. This can be especially true for new businesses, whose owners may not be familiar with all the different tax obligations.
But even if you've been in business for a while, it's important to keep up to date with tax laws. They change regularly, and failure to comply can result in heavy fines. The best way to avoid this mistake is to speak to a tax accountant. They can help you understand your tax obligations and make sure you're compliant with the law. Your accountant can also advise you of any changes in tax laws that may affect your business.
They can also help you claim any deductions or tax offsets you may be entitled to. This can save you a lot of money when you want to file your tax returns.