Taxes are, unfortunately, a necessary part of life. Whether you are employed or own a small to medium enterprise (SME), you will have tax obligations in one form or another. SMEs in Australia need to lodge a business activity statement (BAS) with the Australian Tax Office (ATO) on a quarterly basis. BAS helps your SME report and pay your goods and services tax (GST), pay as you go (PAYG) instalments, withholding taxes and any other relevant taxes owed by your business.
That’s a lot of acronyms! An easier piece of information to remember is the 28th of October. This is when your next BAS is due. Perhaps you already have your BAS ready to go, or like many others, you find yourself in a rush every three months to submit the correct documents. Whatever situation you’re in, it pays to be on top of your SMEs financial records so that future submissions are a breeze. Here are five tips to help make your SMEs tax time a little bit easier.
Tip #1: Be clear on the tax codes
Taxes are often complicated, but they don’t have to be. One of the first steps you should take is to review and clarify the different tax codes you are using in your activity statements. There are lots of them, and it can be easy to get them wrong. Usually, this issue occurs when SMEs load transactions into their accounting software. While it may take a bit of extra time to confirm the correct codes with the ATO (or other professional sources) when you first input any new transaction, it can save headaches and even more time down the track.
Tip #2: Stay organised throughout the year
This tip applies to all aspects of your business. If you want to be in the best position to manage your affairs, whether that’s taxes, business finance, budgeting or growing your operations, you need to be organised. When it comes to your taxes, make sure your bank accounts are reconciled, and your accounting is up-to-date regularly. This might require a weekly review on your behalf or a detailed check and report from your finance staff.
Staying organised throughout the quarter ensures there are no surprises when it comes to reporting. If you’re not already using cloud accounting software, you should be. These tools are designed to keep your accounts in order and highlight anything that doesn’t add up so you can deal with it promptly before it becomes an issue.
Tip #3: Take detail to the extreme
If you have extra time, or simply want to ensure your accounts, records and your BAS is as error-free as it possible can be – you need to dive deep. When preparing your BAS, make sure to consider the following:
- The specifics of your bank reconciliation. Check every account balance across each month. Does your reported balance match your bank statements? Check that there are no outstanding or unallocated transactions sitting there and unaccounted for.
- Your GST current balance. Make sure that the GST balance on your balance sheet matches your BAS. Any differences need to be addressed, so stay on top of any discrepancies to avoid issues.
- How your current BAS compares to your last one. If there are any significant differences between your existing BAS and the last one, you might have a problem. Unless there’s an apparent reason for material differences, you might need to revisit your inputs and double-check everything has been done correctly.
Tip #4: Communicate with the ATO
Sometimes other priorities will get in the way, and you miss the requirements for your BAS. If this does happen, make sure to communicate with the ATO as soon as you can. They will listen and negotiate terms with you to close out your commitment. Negotiable factors include penalties, any interest due on late payments or instalment plans to pay off your SMEs obligation over time.
Tip #5: Make use of a professional accountant
Depending on the scale and complexity of your SME, it may be a wise move to enlist the services of a qualified and reputable accountant. Once your SME graduates from a small operation, it’s a worthwhile return on investment to outsource the task to someone who will take care of the process for you.
“The ATO will give registered agents (your accountant) up to an extra month to submit your BAS.”
An accountant will go over all your reconciliations, report any issues to you, assess any deductions and can prepare and lodge your BAS on your behalf. As an extra bonus, the ATO will give registered agents (your accountant) up to an extra month to submit your BAS, meaning more time in your pocket to get on top of everything and make any payments.
Whether you need help consolidating your finances to simplify your financial position or increasing your cash flow to meet your tax payments while sustaining your business, a business finance broker can help. Capital Plus Finance is an experienced business finance broker that has your best interests at heart. The team at Capital Plus Finance will do everything we can to help you secure a suitable finance solution for your small business. Please give us a call anytime to find out more or to have an obligation-free chat about your business’s funding situation.