The tax season is usually one of the busiest times in the business year of Australian businesses. A good number of large businesses understand the importance of responsible accounting and, therefore, they hire professional accountants to do their taxes for them. However, small and middle sized business enterprises often overlook issues related to taxes and at times even end up making mistakes which could lead to audits from the government and even liabilities. Here are the three most common mistakes that small businesses make in relation to their taxes and how they should be solved.
Deductions on personal expenses
If you own a car that you also use for business-related expenses, there is a possibility that you have overlooked an overlap in the two functions, and even asked for a refund related to personal expenses. There are other expenses which blur the line between what is business-related and what is personal. It is crucial to have an expert in taxation to help you differentiate between what is a personal expense and what is purely a business expense because wrong claims could create liabilities for you.
Leaving out some of your income
Another source of problems with taxation is when business owners and even employees who have investments decide to leave out some of their income when filing their returns. People do this because it saves them some money. This is a terrible mistake because the moment the ATO catches up with you; taxes could be backdated, leaving you with debts that you might not be in a position to settle. Make sure that you file taxes for everything, including temp jobs, capital gains and even cryptocurrency. If you are unsure about a certain form of income being taxable or not, consult a tax accountant for guidance.
Handle mistakes with confidence
Another crucial thing you need to remember is that people make mistakes when filing their taxes, but this should not be reason to panic. Most people dig deeper financial holes for themselves when they find out a mistake has happened by trying to cover it up as opposed to having an audit done and owning up to the ATO. It would be best to look for an auditor, assess the mistake and what it could mean and get a way forward.
Taxes are a very delicate issue and they can cause an entire business to crumble is not handled properly. Involve experts in audits to ensure your books are clean at all times.