Lodging and preparing taxes is something that every business owner must go through as part of their financial obligations.
While it’s completely normal to commit a few mistakes along the way when lodging your tax returns, there are several ways to prevent those costly blunders from happening. Here are some common tax mistakes that are big no-nos that every small business owner should avoid at all times.
1. Delaying Tax Preparations
We all know that taxes aren’t always a priority for businesses, especially if tax season is still a couple of months away. Taxes take time to file and prepare, which means you need to be ready for it even if it’s not due for a few months. Starting early gives you more time to comb through your records and make sure everything is correct and accurate. Your accountant will surely appreciate it if you coordinate with them early on and give them time to process all your tax-related documents.
2. Inaccurate Record-Keeping
The larger your business becomes, the more crucial it is to keep accurate records of every single business transaction. You need to have systems in place to keep track of all your financial dealings and progress. If you haven’t already, switching to a cloud-based accounting system or hiring a Caloundra business accountant that uses cloud-based accounting will work wonders for your business!
3. Mixing Personal and Business Finances
This is one of the biggest no-no’s any business owner should avoid at all costs. While it sounds convenient to have all your resources in one place, it can be a nightmare when it comes to managing your finances. Mixing your business and personal finances can be quite dangerous as you can erroneously treat your personal income as business revenue. Always keep a separate business bank account and use a separate business credit card for easier tracking and record-keeping.
4. Not Being Aware of Changes to Legislation
The Australian government’s annual budget often results in changes to tax and superannuation laws. This can significantly impact your business and result in paying either more or fewer taxes for the year. A responsible business owner should be aware of these changes at all times since you may be missing out on something you can claim.
5. Not Paying Your Superannuation
Superannuation is one way Australians can save money for their retirement, making it another important obligation that you, as an employer, should never forget or neglect to do. You owe your employees superannuation, and it should be filed and paid for on time to avoid getting penalised and missing out on the deduction. Late payment can be costly even if you end up paying in full. You need to stay on top of this responsibility to avoid losing money.
6. Attempting to DIY Your Taxes
While it’s entirely possible and legal to do your taxes on your own, it’s not recommended. For one thing, preparing and lodging your own taxes takes up a lot of time that you could be using to grow your business. There’s also a greater risk of committing errors or missing tax
deadlines. The cost of hiring an accountant or accounting firm is a lot less compared to the penalties and consequences of improperly lodging your tax returns.
Tax mistakes are a natural part of doing business. What matters is what you do as a business owner to prevent those mistakes from happening. Take these examples as a cautionary reminder to always stay on top of your taxes.
Wardle Partners Accountants & Advisors is one of the most trusted accounting firms on the Sunshine Coast. We are business accountants and tax experts aimed at helping businesses simplify their accounting and bookkeeping efforts. When you need a Caloundra-based business accountant you can trust, we are the ones to call. Contact us today to get started!