Electrical Connection Spring 2015

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9 2 E L E C T R I C A L CO N N E C T I O N S P R I N G 2 0 15
TIPS
P art of our role as small business
accountants is to act as a barrier
or intermediary between the
tax office and the small businesses of
Australia.
It’s not that we don’t trust the two
different interests to get along but it’s
more about using our experience and
knowledge to protect the best interests
of the client.
Small business owners will
understand the time pressures placed
upon them and being caught off-guard
by a representative of the tax office can
be a genuine issue. Often clients are not
able to converse about their business
finances in a way that gets the true
picture across.
Dealing with payment arrangements
for small businesses to pay off overdue
debts to the tax office is a daily
occurrence in our office. Some of the
reasons for these debts occurring
can involve:
ǩ Poor cash flow management.
ǩ Using the wrong legal structure.
ǩ Accounting for GST on the wrong
basis.
ǩ Not budgeting for cyclical cash flow.
ǩ Business owners spending
unassigned cash in the bank.
ǩ Not using accountants or bookkeepers
to monitor future tax amounts to be
paid.
ǩ Rarely are these issues caused by
‘acts of nature’, but this can be a factor
as well.
So the issue here is how to deal with
the tax office and keep your debts under
control once they have happened.
Negotiating a payment arrangement
with the tax office is normally the first
option clients look to. Our advice is
always to seek alternative finance to
cover ATO debts as they can often be
spread over more lenient time frames.
Sadly, many small businesses think
this is where the process stops but
this is not the case. Once a payment
arrangement is in place it is your
obligation to make your regular
payments as well as your current
lodgements for both income tax and
BAS purposes. Should you stick to your
arrangement but not lodge and pay
your most recent BAS on time then
your arrangement defaults?
Every time you default it becomes
increasingly difficult to negotiate a new
arrangement. This is how businesses
fall further and further behind.
The key piece of advice in this lesson
is not to fall behind. The way to
keep on top of your obligations is to
know what they are and when they
are due. You can only do this by taking
up the services of a bookkeeper or
accountant from the very start of
setting up your small business. So
many of our new clients have waited a
year or two before seeking help and end
up paying two years of tax in one year.
This is a recipe for disaster and places
further cash flow stress on new small
businesses that are already running in
a very lean state.
mas accountants
THE A-Z OF ATO PAYMENT
ARRANGEMENTS
When hit with a tax bill, most
small business operators seek
out a payment plan. You can do
much better than that, writes
John Corias . Always to seek alternative finance to
cover ATO debts as they can often be
spread over more lenient time frames.