Kym Nitschke explains the ten common tax mistakes you need to avoid to stay in the good books with the Australian Tax Office.
Like most business owners, you’re probably not thrilled when tax time rolls around each year. Not only is the process tedious, but the risk of making a mistake adds to your tension.
How can you avoid making serious mistakes when you lodge taxes for your business?
Take a look at ten of the most common tax mistakes business owners make.
The longer you put off doing your taxes, the more stress you add to your life. Leaving things to the last minute is a sure way to guarantee that you’ll only make more mistakes as you rush to file in time.
2 Missing the deadline
Running your business may have you under the pump, but that shouldn’t be an excuse for filing late. Work closely with an experienced tax accountant, who should help keep it front of mind for you, and set reminders for yourself so that you aren’t caught unprepared and hit with fees.
3 Losing track of super
Make sure you know whether people working for you are legally considered employees or contractors. If you report incorrectly, you could be shorting them the super contribution you’re actually obligated to pay. Losing track of where you’re supposed to make super contributions can cause a real headache at tax time.
4 Forgetting to report income
Are you really reporting all of your income when you lodge taxes? All of your income can include more than what your business brings in. Stay alert to interest earned on your bank balance, dividends from the shares you own and any income earned from other jobs you may have held throughout the year. This includes income earned overseas.
5 Taking a personal loan from your company
Things get messy when you try to reconcile the numbers after you’ve taken some of the company’s revenue to cover personal expenses. You should contact a professional accountant for advice if you find yourself short on funds.
6 Bad record keeping
Can’t remember how much you spent on work-related travel? Keep losing track of receipts? Even small instances of record neglect or messy bookkeeping will come back to bite you when it’s time to lodge your tax return. With easy to use platforms like Xero, there’s really no excuses!
7 Using unreported cash for personal use
A cash payment to your business is a convenient chunk of change. The money you have in-hand can easily disappear when you top up the petrol in your car or go out to eat. But that money, once spent, is almost impossible to track down. You’ll have the invoice at tax time and some unaccounted-for stock, but the figures won’t add up.
8 Claiming the wrong work-related expenses
You could cop some heavy fines after lodging your taxes and claiming business expenses that the ATO doesn’t approve of. The ATO has very specific guidelines about what you can and cannot claim, so familiarise yourself with those before filing and ask your accountant if you’re unsure.
9 Overlooking work-related deductions
On the other hand, you may be shorting yourself some major tax benefits if you don’t know how much of your expenses are actual tax benefits. Again, a tax expert is best positioned to help you identify the opportunities.
10 Attempting to lodge taxes without professional help
Perhaps you’ve successfully lodged your personal tax return on your own in the past. But lodging for your business is an entirely different matter. You should seriously consider engaging the professional services of an accountant. An accountant will help you get your taxes done right the first time and the success of your business depends on that.
Talk to the experienced tax accountants at Nitschke Nancarrow, who have spent years helping business owners with all aspects of tax, keeping finances under control and successfully building wealth.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: ATO, business owners, financial adviser South Adelaide, lodging taxes, South Adelaide business, tax mistakes, tax tips