- On September 21, 2020
Managing tax is indeed a pain for many self-employed individuals and small business owners. There are so many tasks that you have to manage, and the last thing on your mind is to sit and look through your books for hours. However, it’s vital to keep your tax under control if you want to avoid severe penalties and ensure you’re not paying too much tax.
If you’re having a hard time with your taxes, it is vital that you know these six common mistakes that small business owners make so that you can avoid unwanted legal or Tax issues:
1. Incomplete Or Missing Tax Invoices
Any business purchases above $82.50 must have a tax invoice, and they must be kept for at least five years. Small business owners tend to commit this mistake and end up claiming items that they don’t have records of.
2. Inconsistent Declarations
It’s a common mistake to have inconsistent declarations that cause data variations. The Australian Taxation Office (ATO) acquires data from businesses across a specific industry to create a benchmark that contains a band of percentages. If your business falls outside this band, you can expect delays and the ATO can take a closer look.
3. Failing To Get Correct Workers’ Status
Another common mistake is that business owners fail to get the correct workers’ status, which can put them in legal complications. Not knowing the correct employee’s status may cause them to overpay or even underpay, which can get business owners in trouble, not only with taxes but also with Fairwork. You can easily avoid this by ensuring that you have the correct employee status and always double-check them.
4. Failing To Keep Good Records
Your good records mean that you have good business, which is why it’s essential that you keep them. Unfortunately, it’s a common mistake that a lot of businesses owners make. If you don’t have good business records with you, know that you will likely miss out on many tax deductions.
5. Not Keeping Track Of Tax Law Changes
Keep in mind that payroll rates often fluctuate, and you must keep track of these changes, or you might get a penalty when your books aren’t accurate. With this, it’s essential that you follow tax law closely, and there are online resources that will help you stay updated with the latest rulings and determinations in taxes.
6. Not Having An Accountant
Many business owners, specifically small ones, tend to take care of their books by themselves because they want to save more money. However, the lack of experience and time often leads to mistakes that cost more down the road. Investing in an expert accountant is essential because it’s a worthwhile investment that will help your business grow in the long run.
Sorting out your taxes is indeed not an easy task, yet it needs to be done. Avoiding these six common mistakes is essential, and at the same time, consider investing in a professional accountant that can help you with your taxes. With an expert who is dedicated to sorting out your taxes, you will have less to worry about and can focus more on your core business tasks.
If you are looking for a small business tax accountant in Melbourne, ThinkWiser is here to help you. We can help our clients with Accounting, Bookkeeping, and Tax services. Book a free consultation today!