Five financial resolutions for small businesses

IT'S tempting to put tax obligations in the too hard basket, but spending time on these five main areas can save time and money in the new financial year.

Stephen McCutcheon

IT'S tempting to put tax compliance obligations in the too-hard basket.

That's because it is unglamorous and unrewarding work, and a new survey says as many as one in five small business owners would prefer to clean the workplace toilet than tackle their tax returns.

But, as the saying goes, the only two certainties in life are death and taxes.

Institute of Public Accountants senior tax adviser Tony Greco says if you did not get your tax mechanics in order last year it is a good idea to get on top of things this year.

Perhaps take on some new financial year resolutions.

SUPERANNUATION

If you are running a business, your super guarantee contributions to employees increase to 9.25 per cent of their salary this financial year.

"Businesses need to budget for these extra on-costs," Greco says. He adds that payroll systems need to be adjusted to ensure that businesses are paying the extra amount so there are no nasty surprises at the end of the financial year.

MYOB chief executive Tim Reed says from today workers aged 70 and older will be eligible for employer-paid superannuation contributions, reflecting the ageing workplace and increased longevity.

DOCUMENTATION

Greco says many businesses fail to keep valid tax invoices for all their suppliers.

It is good housekeeping to make sure you have all the documentation. A lot of businesses are claiming GST credits without having the necessary paperwork, he warns.

Greco says the law states you must have the documentation when you lodge your Business Activity Statement.

He says if the business has entered into a salary-sacrifice arrangement with an employee they must ensure everything is in writing.

DEADLINES

Greco says deadlines for the lodgement of Business Activity Statements and payment of Pay As You Go dues are clearly stipulated and businesses should work around them.

"These dates are all prearranged, so it is a matter of getting your paperwork organised around those dates that you have to lodge," he says.

Reed says if you turn tax obligations into a weight that you keep avoiding, you end up not being able to take advantage of the opportunities you have for tax deductions.

He says small businesses working in the building industry need to make sure they are reporting all payments made to subcontractors. The first deadline is July 21.

CASH FLOW

If the business is experiencing lower levels of activity and profitability, there is the option of reducing its quarterly PAYG income tax instalments instead of having to wait until the end of the year to reclaim overpaid tax. But beware you only have a 15 per cent buffer before the ATO charges interest if you underpay by a large amount.

If you are experiencing problems paying your tax debts, the ATO can offer payment arrangements.

"Be sure you can meet these agreed commitments as the gloves are likely to come off if you fail to honour the arrangements," Greco says.

WRITTEN-OFF DEBTS

Greco says if a business has written off a debt for which it has already remitted GST to the Australian Taxation Office in a previous BAS, it can claim it back.

"They forget they have paid the GST. If it is a debt of $1100, the GST is 10 per cent, which is not insignificant," he says. "For every $1100 in unpaid debts, there is $100 up for grabs."

Reed says that, if there is stock sitting around for a year or two, it may be able to be written off in the just-completed financial year.

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> Couple mow a path to two decades of success

GAYLE McCutcheon mows down the tax compliance requirements, while husband Stephen gets on with repairing and selling lawnmowers.

The couple, celebrating 20 years running the East Keilor Mower Service and Sales, have seen plenty of highs and lows.

During the drought that hit Victoria and other parts of the nation, they feared they would close. But, thanks to rain and a renewed interest in lawns, the business is chugging along.

"The business has just had its 20th anniversary and we have been operating as a partnership since the start," she says. "Stephen does all the mechanical work and I handle the bookwork."

The duo find there is a lot of work involved in paperwork.

"Gayle has to spend at least three hours a day, five days a week, to keep on top of (it all)," Stephen McCutcheon says. "We can't afford to let these things get behind."