All businesses in Australia are legally required to report their finances to the government. There are also payment obligations businesses must meet. If your business is not in compliance with these laws, then you can incur heavy penalties. That is why it is so important to adhere to your business obligations and maintain accurate and up to date records.
Tax laws are complex and can be confusing to many people. If you are struggling to meet your business reporting and payment obligations, or you are not sure what they are or how to comply, then these are signs that you might be struggling. To protect yourself and your business, it is highly recommended that you consult a bookkeeper.
What does your business need to report?
Every year, business owners are required to report their financial status to the Australian Tax Office (ATO). The two key reports are Business Activity Statements (BAS) and the annual tax return.
Annual Tax Return
Australian tax laws are complex and are amended every year. It can be very difficult to keep up with the changes and how they apply to your business. A bookkeeper has professional qualifications and is obliged by law to stay up to date. They know the tax laws, what deductions you can claim and what you can’t, and how to navigate through the legal framework to minimise the tax you need to pay. You will save a lot of time and reap numerous benefits by having a bookkeeper handle these complexities for you.
Business Activity Statements (BAS)
If your business is registered to pay GST in Australia, you must lodge its BAS correctly and on-time. Its purpose is to declare how much GST your business owes to the ATO.
BAS helps you to report and pay your:
• goods and services tax (GST)
• pay as you go (PAYG) instalments
• PAYG withholding tax
• other taxes
BAS can be lodged monthly, quarterly, or annually. For small-medium businesses where GST turnover is less than $20 million, quarterly lodgements are the most common.
If you are running your own business, most of your time and focus is spent on improving your business and increasing profits. It can be difficult to keep up with paperwork and have reports ready and lodged when they need to be. If you are struggling to understand your tax obligations, or are often running late with lodging BAS, if you are receiving reminder letters from the ATO that reports are due, or having reports returned to you to amend, then it is really worth engaging the services of a bookkeeper. In the worst-case scenario, if you have incurred any financial penalty from the ATO for non-compliance, then you should definitely seek help.
A bookkeeper who is a qualified BAS agent has the expertise to do all tasks relating to BAS. According to the Institute of Certified Bookkeepers (ICB), a BAS Agent is issued a licence that says they can advise a client, provide certainty to a client or represent that client to the tax office in all matters relating to:
• goods and services tax (GST)
• wine Tax, Fuel Tax, Luxury Car Tax
• payment of fringe benefits tax (FBT)
• aspects of Payroll that relate to the withholding of tax amounts and the reporting of that amount to the employee and the Tax office
• other PAYG Withholding amounts: ie no ABN, Interest & Dividends
• the payment of income tax via PAYG Instalments
• Taxable Payments Annual Reporting system
• Superannuation Guarantee system as related to payroll
Apart from the expertise your bookkeeper has, having a qualified bookkeeper doing your BAS also give you peace of mind because if anything goes wrong, they have Professional Indemnity Insurance of at least $250K. In addition, if your bookkeeper fails to take reasonable care, fails to lodge on time, or makes any false or misleading statements, you are protected under Tax Practitioners’ Board laws.
What are your business payment obligations?
If your bills are piling up, or you’re not sure which invoices have been paid, a bookkeeper can help you with these too. They can keep track of your invoices and pay bills for you so you keep a good relationship with suppliers. At the very least they can provide you with a list of payables to help you keep on top of things.
It is important for your books to balance. If you are finding that something is always missing and you just can’t reconcile some accounts, a bookkeeper can take a load of pressure off you. They can ensure that your reports and balances are accurate and balance correctly. This is not only important to the ATO, but also of crucial importance to the success of your business. When your books balance, you have a clear idea how well your business is really doing, and you can pinpoint areas which may be inefficient or less profitable. Armed with this knowledge, you will be able to make more informed decisions about where things can be improved and manage cash flow better.
Payroll is probably the most heavily-regulated and complex payment obligation any business has. You have to keep track of numerous awards and agreements, and various entitlements and allowances such as sick leave, holiday pay, superannuation, and termination payments, just to name a few. You must ensure all employees are paid correctly and on time and that the correct amount of tax is deducted.
You must also ensure that any PAYG instalments are paid on time, and lodge a PAYG withholding report at the end of each financial year if your business withheld amounts from payments to any employees, non-residents or foreign residents.
If you are struggling to understand the complex myriad of financial obligations of your business or finding it hard to keep up with documentation, a bookkeeper can clearly be of an enormous benefit to both you and your business. They not only take a large burden from you, but also enable you to view the health of your business with much more clarity.