As accountants working with small & medium businesses everyday, we often see small businesses focusing on paying wages, suppliers and overheads, and leaving tax, GST and superannuation as an afterthought. Late tax & super payments is a big red warning flag that your business is not operating profitably or having cashflow issues.
As a result, business owners find a sometimes insurmountable amount of debt has arisen which can not only be stressful but challenging to pay in a reduced amount of time.
So why as a small business owner should you make tax & super a priority in your business?
- It’s a legal requirement to pay taxes & super.
As we all know the only two certain things in life is death & taxes. Whether that tax is income tax, GST or payroll tax (for large employers) we can’t just ignore our obligations. Late payment of taxes can result in late interest charges, penalties and even legal action from the ATO.
Even more importantly, a director of a company that fails to meet a super liability by the due date, automatically becomes personally liable for a penalty equal to the unpaid amount.
- Unpaid ATO debts will affect your credit rating
From 1 July 2017, the ATO can disclose to Credit Reporting Bureaus the tax debt information of businesses that haven’t effectively engaged with the ATO in the management of those debts.
What this means for small business? For tax debts over $10,000 that are at least 90 days overdue could be recorded as a credit default. A black mark that lasts 5 years and could affect the operation of your business through financiers withdrawing support & supplier credit stopped.
- Reduce your stress
Operating a small business is a unique and already stressful calling. Your mind never switches off as you deal with customers, suppliers, staff, banks as well cashflow issues & sales budgets. Add to that overdue tax debt & working out how to repay tax debt in a shorter period of time whilst also budgeting for current obligations.
For many the stress and debt can be insurmountable and the business folds. If you want to be part of the businesses in Australia, not just surviving but thriving, managing your tax & super obligations is an absolute must.
Next blog we’ll discover the best options of managing cashflow for tax, GST & superannuation obligations.
If you have any overdue tax or super liabilities in your business & would like assistance with dealing with the ATO, contact a team member at Goad Accountants on (07) 3849 3816 or email@example.com.
Disclaimer: The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website are of a general nature only and are based on Goad Accountant’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.