A business tax return is best prepared by someone who knows the ins and outs of your business. Hiring an accountant gives you peace of mind when it comes to tackling one of the most challenging tasks of running your business. However, an accountant does not guarantee immunity to mistakes. There are many reasons your business can fail on making a business tax return.
Not taking bookkeeping seriously
Poor bookkeeping has a negative effect on your business as it involves record-keeping. Your company tax return is computed based on your records and when the task is handeed over another bookkeeper who seems to run through everything including making necessary adjustments, things can get really mixed up. For a seasoned bookkeeper, these tasks are just a walk in the part not until tax time. When the ATO knocks on your door, checking your records is one thing that make bookkeeping a tedious task.
Nowadays, bookkeepers no longer spend too much time on reconciling bank accounts, chasing unpaid debts, reviewing reports and others. Cloud services such as Xero allows bookkeepers to deliver accurate reports and ensure that superannuation is paid up. These are simple and basic tasks, but they are the ones that business owners often miss out.
Not paying on time
Tax returns are usually due in May at the end of the financial year. Since your company has all the time in the world to prepare and lodge timely payments, there are still business owners who still lodge late. As a result of late payment, business owners suffer from penalties.
The good news is penalties can be avoided by ensuring that your tax affairs are in order. Having a good process is key to preventing problems associated with your tax returns. It is also imperative that you plan your tax bills in advance.
Taking out personal loans
Cashflow is an important aspect of your business and just because you are the business owner does not mean you can borrow money from your company. Before making any decisions of taking the cash, take tax rules into consideration. Taking money from your company to cover living expenses can impact your business. Speak with your bookkeeper or accountant so you can obtain sound advice and recommendation.
Not paying superannuation
Superannuation brings stress to business owners especially those who do not completely understand how it works. If you are still wondering whether or not you should pay super, checking out ATO’s employee/contractor decision tool will be a huge help. Knowing what you need to pay for will enable you to pay the superannuation on time.