Is The Latest Ato Compliance Operation A Warning To Small Businesses?
Finances will most likely be at the top of your list of priorities if you're assessing businesses for sale. After all, while purchasing an enterprise is one thing, having a grasp of the funding needed to keep it sustainable, profitable and compliant in the long term can be tough.
In the case of the latter, the Australian Tax Office (ATO) has a number of schemes in place that can help business owners stay on top of taxation. For example, its small business assistance portal offers a whole raft of financial help and advice to both new and existing enterprise owners.
The ATO is to target up to 90,000 small businesses.
While the ATO is certainly in a position to help, its main job is to ensure that all Australian companies operate on a level playing field when it comes to compliance.
Small business tax obligations
To that end, a report from H&R Block tax accountants suggested that the ATO will target up to 90,000 small businesses who aren't currently meeting their tax obligations. While that's a large number, individual cases will of course be assessed on their own merits, with the severity of each being particularly varied.
As touched on, the focus of the operation is to mainly create more small business taxation transparency, and point out where some owners may have fallen foul of the rules, deliberately or otherwise.
"If there's a discrepancy between what a business has reported [and] what its financial institution discloses, businesses can expect to hear from the taxman. The ATO is recommending that if you think there might be a mismatch, you should make a voluntary disclosure to avoid stringent penalties of up to 95 per cent of the unpaid tax," explained director of tax communications with H&R Block Mark Chapman.
Compliance for small businesses
As touched on, the ATO is really there to help would-be and existing enterprise owners, and those looking to soon takeover a business for sale shouldn't worry about getting a knock on the door from the taxman, providing all of the applicable financial information is in order.
Small business compliance may seem complicated at times, but stringent recordkeeping and common sense can keep owners on the right track.
Ultimately, there are a few basic steps to take if your business is to meet the compliance requirements set out by the ATO. The Australian Securities and Investment Commission explained that some are as simple as having a registered address, or even just disclosing the details of the company's directors.
It may seem like a complex subject and there are times when it's best to consult with a professional accountant or industry body, but for the most part, much of small business compliance comes down to clear thinking and best practice recordkeeping.