Many clients come to me for advice when something has happened, or a mistake has been made. These things can often be avoided with good advice and planning. For today’s blog I discuss the six most common accounting mistakes I see;
- Not planning ahead for BAS
Many clients get caught out when BAS time rolls around, as they have not planned ahead for the amount payable. This may include GST, PAYG for staff, and Installment tax for themselves. Planning for these amounts during the quarter will help relief the pressure when its lodgement time.
- Lodge on time or beware!
The ATO is very focused on taxpayers lodging on time at the moment. In fact the penalties can become quite large if you lodge late more than once. This includes all reports and forms a business may need to lodge. Being aware of lodgement dates can help avoid penalties.
- How expensive is staff?
When employing staff most business owners start calculating how much wages they may need to pay that person. However a common mistake is not including all other expenses associated for that new staff member. This may include super and workers comp, or another vehicle, or additional software licenses. Each business cost will be different.
The biggest mistake clients have made over the last few years has been the $20,000 write off for small business initiative. It is not an offset or a rebate, it is a deduction. It will help a small business make a large deduction for an asset purchased under $20,000 in one year and thereby saving them lots of tax. This measure was put in place to help the economy grow, but the message around it was not clear.
- Hobby vs Business – ABN?
In today’s age of Facebook, online business, and entrepreneurship I don’t believe there is any valid hobby that is not considered a business. It’s a common mistake to believe you don’t need an ABN because it is a hobby. The ATO monitor online business for business activities not reported.
- Keeping your Accountant in the dark.
I included this as a common mistake as I have experienced it with my clients in the last 12 months. Talking to your accountant about challenges in your business is important as they may be able to offer advice. It could make a small or huge difference to what is occurring in your business.
If you need any help with your small business accounting we would love to help. Book a free consult today.