Why You Should Take the Threat of a Tax Audit Very Seriously
Posted on: 25 April 2017
Death and taxes. Supposedly, the only two things that are guaranteed in life? Either way, if you're in business in Australia you know that the tax season comes around all too quickly. You've got to pay attention to getting this right, or you risk an audit by the dreaded ATO. What do you need to pay attention to, especially when it comes to your record-keeping capabilities, if you're going to avoid an unwanted visit?
How Do You Prepare?
There's no such thing as a "standard" audit, especially as far as the tax authorities are concerned. In this respect, you could say that it's very difficult to prepare for one, but the best defence you can have is a strong team of bookkeepers and accountants on your side. You may think that you have a "handle" on tax issues, but you'll be even stronger if you have experts on your team.
Try Not to Stand out
You also need to understand what may cause you to stick out like a sore thumb from the point of view of the tax people. Much of the work is automated and computer programs used to analyse this system can throw up any anomalies for further investigation. If your business has very high overheads in relation to another in your particular realm, this can single you out. Try to keep all your costs in line with what is commonplace in your field.
Does It Really Matter?
When you're trying to run a business, you will inevitably take on more than you should and this leaves little time for the "peripheral" stuff. Rightly or wrongly, entrepreneurs often put bookkeeping into that category and figure that they can do it all later. inevitably, though, you will forget details, mislay receipts and fail to record accurate details. Not only may you understate revenues, you may also miss out on crucial deductions or credits. Get some good quality bookkeepers on your side to help you out.
Where Did You Put That?
When you get experts to maintain your records you will also ensure that they are kept for the requisite amount of time in good order and safe keeping. The ATO requires you to keep all associated documentation for a number of years, just in case an audit may be required in future. Don't know where your records are in this scenario? It may end up costing you more than it should.
Don't Rely on Software Only
Many small business owners seem to think that an off-the-shelf software program may cover all eventualities. While these services can streamline a lot of work, they are also no substitute for a first-class bookkeeping team, knowledgeable in your specific business.
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