With the first quarter behind us, there’s never been a better time to sit back and take stock of the tax health of your business. If there’s one organisation you really don’t want to fall foul of it’s the Australian Taxation Office, so here’s a list of the things you need to consider to ensure you stay on the right side of the taxman.
Registrations
Make sure your business has all the tax registrations you need – including an Australian Business Number (ABN), GST registration if the turnover of your business is more than $75,000 (or expected to pass that threshold soon) and PAYG Withholding if you employ staff.
Get your super obligations right
Ensure you are meeting your Superannuation Guarantee (SG) payments for your employees. This year, the ATO is focusing on SG underpayments by employers as a serious concern and may come after directors in a personal capacity, including seizing bank accounts and imposing penalties on directors.
Don’t blur the line between company money and personal funds
Make sure your business doesn’t mix up the company’s money with the shareholder’s personal funds. A salary or franked dividend is fine but otherwise taking loans or payments out of the company for personal use can cause the ATO to deem those amounts as unfranked dividends. That will be financially painful for your business and for you personally.
Keep on top of your bookkeeping
Keep your paperwork in order. If you find the bookkeeping side of the business a chore, consider getting a third-party bookkeeper in to help you keep records up to date, meet tax and super obligations and manage cashflow, particularly as we near the Christmas shutdown, which is when cashflow issues often become critical for many small businesses.
Mark Chapman, Tax Communication Director, H&R Block
