Small business tax tools
“Hey, boss, the ATO is on the line for you…they want to come out and do a TAX AUDIT!!!”
Do you have nightmares about a phone call like this? Even if you are the most honest finance manager, you may still dread a tax audit due to the amount of time and cost that it can take.
Do you want to reduce your anxiety about whether you might inadvertently trigger a tax audit from the figures you report to ATO? One way to do this is by Benchmarking. No, “benchmarking” is not graffiti on park seats (sorry, that’s a mom joke!).
Benchmarking is comparing your business performance against other similar businesses – those in the same industry and with similar turnover. For example, if your business is reporting $250,000 of stock sales and $230,000 in stock costs, the ATO could look at similar businesses, see that stock costs typically make up 40% of sales in your industry. With your figures, they will start to take an interest in your business. Such figures would indicate that you might be selling a lot of stock for cash and not reporting it, for instance.
To compare your business with others, the ATO has published industry data on ATO Benchmarks. They have also given you guidance on how to calculate your own benchmark figures Guide To Calculate Your Own Benchmarks. These figures are also fantastic in helping you compare your business performance against your historical data and against your competitors, to enable your business growth, not just for tax purposes.
Becoming more diligent about collecting, recording and keeping all receipts for tax deductions will enable you to sleep comfortably at tax time. If you do get audited, then having proof of every expense claimed is essential. There is a brilliant tool to help with this.
Shoeboxed is a service organizes your receipts, dockets or invoices. All you need to do is send them through, and Shoeboxed will scan, do the data entry and send back a file containing all the information ready to be imported straight into your MYOB file.
Keeping records the right way
Are you are keeping your records in accordance with ATO requirements? Don’t know, but hope so? Well, here is a Record Keeping Evaluation Tool from the ATO to guide you in the correct records to keep for your particular business.
There is a listing of various tax rates on the ATO website but it is the calculators that I particularly like to use especially in relation to the minefield of payroll:
Here is a tool that allows me to determine Eligible Termination Payments (ETPs) and how much to withhold. Another tool to help me work out how much PAYG I need to withhold – my MYOB package normally does this perfectly, but when it comes to staff who have received multiple bonuses in the year, I need some extra help, PAYG Withholding Tool is great.
The end of year is a really good time to make sure that the information that you have supplied to the ATO throughout the year is correct. I often find that BAS figures supplied at the end of each quarter have changed by the end of the year – extra payments have been entered in prior period, for example, because the file wasn’t locked after reporting the BAS. As for payroll, well, if you don’t have your Instalment Activity figures aligned with your PAYG Summary reporting at the end of the payroll year, you can be guaranteed that the ATO WILL be contacting you. To help you, the following link will allow you to download some reconciliation tools to use: GST/BAS RECONCILIATION TOOL
And of course, MYOB AccountRight Live accounting software range has a number of tax tools to help. For example:
– Payment Summary wizard,
– Employment Termination print outs,
– Payroll tax calculation tool,
– Company Data Auditor,
– BASLink, the ability to reconcile any account, and
– Many features to help keep your reporting to the ATO accurate and make your life easier.
So with all these tax tools, there is no reason to fear the phone call from the ATO…they’re probably ringing to tell you there is a tax refund on the way!
Don’t forget to meet all your tax and compliance obligations. Check out MYOB’s Tax Changes Information section, meant to help startups and small businesses stay on top of their game with tax changes.
Pam originally published this article on the MYOB Blog.