One of the largest financial obligations many small businesses have, after their wages, is obligations to the Australian Tax Office (ATO). The ATO will often wait quite a while before commencing legal proceedings to chase owed funds compared to other debtors such as suppliers.
Here are some tips to help you keep on top of your tax obligations and avoid bankruptcy.
Get your bookkeeper to run a reconciliation and let you know how much money you owe for the employees PAY-G (pay as you go) tax, superannuation payments and GST (goods and services tax) obligations. Transfer the owed amounts into a second, high-interest account so that they are not there to dip into for operational requirements. You may not be required to pay the money each month but by putting aside the amounts you won't find yourself unable to pay a large quarterly bill. If you do need to dip into the money temporarily to make up a gap in cash flow, then at least you will be making an educated decision to borrow against this money as a temporary measure while understanding your future obligations.
Employ a tax agent
If you are finding it challenging to keep on top of your tax obligations and can't accurately estimate how much you will owe, it can be useful to use a tax agent. They can help to look at the transactions that come through your business to work out which are tax deductible and which should be included in GST obligations. Often getting a tax agent to glance over your account for a quick checkup at the end of each month can help you to keep on top of your obligations and ensure you have cash available.
Chat with the tax office early
If you seem unable to make payments, it's a good idea to talk to the ATO early on. They can help you to organise a reasonable payment plan to allow you to pay off your taxes and avoid additional payments and late fees. They are much more eager to work with small businesses than to send them bankrupt.
If you are a small business owner, there is a range of options to ensure that you can meet your tax obligations. While the ATO can initiate legal proceedings to claim owed money if your tax obligations go unpaid, they are generally very willing to work with business owners to avoid this outcome.Share