Tax compliance is considered as one of the most testing tasks for a small business owner, especially for one who is not too knowledgeable about finance and accounting. However, to push for business process improvement and business development, a business owner must be able to sift through tax information and practices and pick out the ones that only cause mishaps.
Tax mistakes are common—the ATO can attest to this. What you need to do is to watch out for these common mistakes and strive to never commit them again.
Failing to include “all” income
The ATO requires all Australian taxpayers to pay tax for their worldwide income. It is important to note that you are not the one who decides which income ‘counts.’ When filing taxes, you need to include all of your income. Remember, your income includes interest income, short-term contract or freelance work, government benefits, bonuses, dividends and even overseas income.
Also, don’t be one of those people who use estimates rather than actual figures. The ATO has its own systematic way of obtaining these numbers themselves. They will know if you are only doing a form of guesswork when filing your earnings, tax paid and tax deductions.
The tip is to wait until you receive your official PAYG before filing your income and tax paid on the tax return. Also, use actual receipts when entering deduction claims.
Bad bookkeeping/record-keeping habits
Although this is considered a common mistake for most Australians, the consequences can still be pretty grave. If there is one thing you can do to ensure you avoid any mishap with the ATO during tax time, it is to practice good bookkeeping/record-keeping habits. This practice veers you away from getting audited by the ATO.
Also, without evidence to back up your claims,—receipts for expenses—you are only allowed to claim a maximum of $300 worth of work-related expenses. So if you want to claim more than $300 and boost your tax refund at the same time, keep your receipts as evidence to support your claims.
Incorporating good bookkeeping/record-keeping habits into your business processes helps you understand you financial business better, identify extra deductions and put your business in a better tax position.
Failing to lodge taxes
Yes, it is common for Australian citizens to actually fail to lodge their tax returns.
If you are having trouble catching up with the deadlines, you can seek assistance from tax agents. They are given the privilege to lodge much later than individuals. That is why if you can’t afford to pay for your tax bill or are really late in lodging, you may want to consider getting professional help.
The ATO is usually pretty lenient when it comes to negotiating payment plans for outstanding taxes. You can very easily get your tax filing back on track this year with the right expert help.
To learn more about tax responsibilities and business process management, you contact myCEO. We are more than willing to extend our help through expert advice and solutions for all your business concerns and queries. Take the TRUST assessment to check how your business is doing in the market and in the industry as well.