I was reading an article recently regarding the thousands of micro & small businesses in Australia currently dealing with significant tax debts and are well behind on lodgements with the ATO.
One third of micro & small businesses are reporting high levels of financial stress, with many struggling with lodgement obligations and significant debts.
“One of the primary challenges faced by micro businesses in the lack of knowledge and expertise in completing their tax returns and BAS’s”
This article was concerning however it didn’t surprise me at all. Many business owners don’t see the value in engaging a professional to help them with the financial aspect of their business. They see is as an expense to their business. In fact, it is an INVESTMENT in their business.
Far too often I see business owners struggling financially and mostly that’s due to lack of knowledge around forecasting their cash flow in and out of the business. It’s so much more than looking at the bank balance and the bottom line of the Profit & Loss report (if they manage to even run that report at all!)
A small but very significant part of my role as a Professional Bookkeeper, is to keep my clients up to date with whether their business is at, at the very least on a monthly basis. I advise them what their obligations to the ATO are at the end of each month, allowing them to put the funds aside, so that when their BAS rolls around, there are no surprises. It eliminates the stress of wondering where they are going to find the money to pay their BAS on time without having to take out a payment plan with the ATO.
Taking out a payment plan with the ATO, whether that’s for tax or GST (and other) obligations, is helpful in the short term, however in the long term, it’s only compounding the problem as the obligations continue to mound up each month and each quarter.
Understanding the ebbs and flows of your business, how that affects the cash in your bank, is paramount if you want a profitable business in the long term.
Putting money aside for tax and BAS is a critical part of managing your cash flow – without planning it’s just a recipe for disaster. It’s no wonder so many businesses are struggling to make ends meet as they don’t know where those ends are! Not so say having a solid accounts payable and receivable system in place to ensure the funds coming in and going out are solid.
“Business owners continue do to what they don’t recognise their tax obligations. It’s not usually a case of ignorance, but it’s more a case of just now knowing or wanting to deal with it”
If you’re struggling with your business finances, or know someone who is, I urge you to contact me so we can organise complimentary catch up session where we can find the roadblock in the business and how we can turn things around to take away the stress and anxiety so many people face every single day.
I believe every business owner in Australia deserves the support they need to avoid them becoming one of the statistics of failed business.
Supporting you in your business success
Karen Whitely
Educating & empowering small business for long term profitability
61 482 080 430