The Australian Taxation Office (ATO) is encouraging SME business owners to review their existing systems and processes to prepare for a smooth conclusion of another financial year.
ATO Assistant Commissioner Jennifer Moltisanti said that implementing effective business systems and maintaining thorough financial records from the start of a new financial year will save business owners considerable time, energy and money.
“An ATO review of business activity statements which were adjusted as a result of audits revealed that over 80 per cent of adjustments were as a result of unintentional GST errors. Many of these may have been avoided with appropriate systems in place.”
To support SME business owners in reviewing and updating their existing systems, the ATO has developed the following practical tips to make it easier for business owners to meet their GST obligations in the new financial year.
#1. Manage the risk of error
- Ensure you have strong internal controls over your accounting systems and processes.
- Conduct regular internal reviews of your systems and processes and make sure they continue to support you in meeting your tax obligations.
- Train employees on how to use your business systems and avoid errors.
- Ensure your systems are secure – access should be restricted and have clear authorisation levels.
#2. Respond to changes in your business
- If your business is undergoing a change, you’re at greater risk of financial error, particularly incorrect reporting of GST. Include a systems review as part of managing change in your business.
- If your business is growing, check that your systems continue to accommodate your business and tax obligations.
- Ensure significant one-off transactions are properly documented and processed.
#3. Keep detailed financial records and check these regularly
- If you have paper records, consider scanning them so they’re also available electronically. Keep business and personal expenses separate. One way to do this is to have a separate bank account for your business.
- Use the correct GST accounting method to record transactions and avoid unnecessary amendments to your BAS.
- Check invoice details, including the ABN number and whether the vendor is registered for GST (especially new vendors).
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