While you are busy keeping up to date with the technical and legal side of your business, who is thinking about the finance issues? No one wants to make their business a target for unwanted ‘attention’, or worse still find they can’t make ends meet. With this in mind we’ve put together a ‘hit list’ of the top issues you need to be aware of in the tax & finance space.
Employee or Contractor? You might be surprised at the answer!
They’ve got an ABN so they’re a contractor, right? Not necessarily — and to add further confusion to the matter, the definition of a ‘contractor’ varies between agencies. For example, who is considered a contractor for payroll tax purposes varies compared to the definition for Superannuation payments, WorkCover, PAYG Withholding or Fair Work purposes. So you need to ensure that you are reviewing each of the definitions regularly to ensure that you comply.
QBCC Minimum Financial Requirements
You just need to sign off on your form every year right? Again, not necessarily the case. You still need to meet the ratios for your category, ensure that your financial accounts are in order and you are meeting all of the minimum financial requirements and not to mention all of the other license conditions. Failure to do so may mean your license is suspended or even worse cancelled.
Understanding financial reports
You’ve been flat out, so why isn’t there any money in your bank account? Cash in doesn’t always necessarily mean profit. When was the last time that you looked at your financial reports? Did you understand them? Having a grasp on your profit and loss and balance sheet and looking at your cashflow and budgets regularly will help you to manage your business. But many just leave it until tax time to do so — meaning that you are looking at historical data — which may not reflect the current state of your business.
The ‘cash’ economy
No one will ever know if you take cash payments will they? WRONG! With current data matching programs, the ATO have more information than ever! They benchmark every business in your industry and if your ratios seem wrong you may be flagged for an audit. They match information from banks, state departments and other sources to identify whether you might be doing the wrong thing. It’s one of the ATO’s primary targets so it’s not a matter of if you will get caught, but when.