Most small businesses in Australia dread tax time and dealing with the ATO.
Lodging quarterly BAS and GST statements and monthly IAS accounts to the Australian Tax Office is a pain, not to mention the end of year reports.
Suppose your small business is getting ready to lodge your tax return or provide vital information to your accountant. In that case, you probably have many questions such as when do I have to pay my GST or what is PAYG or perhaps why do I have to pay my BAS every quarter?
You can go to the Australian Tax Office website for all the information, but they can make the information very confusing as a small business owner. For new businesses or business start-ups, the whole tax system can be highly off-putting. If you have been in business a while, you should have a clearer idea about lodgement dates for BAS statements, but in any case, you can check them here.
For more information about your tax obligations in Australia and tax debts, you can browse their website, but the team at Sparrow Loans put together this information so that you won’t be late with your tax payments.
What If You Can’t Lodge and Pay You Tax On Time?
Many small businesses think that if they don’t have the money to pay their tax, they won’t have to lodge their tax returns. Ignoring your tax returns is a massive mistake as the tax office is not going anywhere and wants, more than anything in the world, your money. And, if you feel like you can put your tax obligations to the ATO in the too hard basket or kick the can down the road, then you’re sorrily mistaken as these guys will pursue you.
There are financial penalties and interest charges you’ll have to pay for not lodging your tax returns. However, the ATO might look favourably on you if you install your return and then make a case for a suspended payment or come to some staggering payment arrangements. If you genuinely present a case to them and make an effort to pay your tax debts, then they’ll get off your back and stop chasing you for the money!
If you maintain contact with them, then they won’t issue you with fines or penalties. But, remember communication is the key when it comes to the ATO. The ATO can be harsh, but they are not animals and can accommodate most small businesses that lodge their return on time and ask for extended payment terms.
Penalties For Not Paying Your Tax
The ATO is there to support small business. They want their money, but it’s in their interest to see you survive as a viable business so they can collect tax off you in the future. If you contact them and ask for an extension on paying your BAS or IAS, then make sure you adhere to the schedule so you don’t accrue any interest or penalties, which will happen. Make no mistake about this.
You will cop interest penalties initially, but it’s up to you to call them up and see if they can wipe these off the ledger.
If you feel that your business can fly under the radar and avoid the scrutiny of the tax office and your tax debt get ready for debt collection agencies to call you. The most common one is Dun and Bradstreet, and these guys can be super persistent. Getting calls and threatening emails from them daily is a pain and can put added strain on your business and mental health that you don’t need.
If you get into this situation, it can worsen as it will affect your credit score and ability to borrow money or conduct your business in the future. Having a bad credit score is debilitating for most small business, so be well aware of these implications. Beyond this, the ATO can look to wind your business up and put it into liquidation if you chose to ignore your tax debts.
How Best to Handle Your Tax Debt
Ok, so you’ve contacted the ATO and realise that you need an extension to pay off your tax debt, which isn’t a crime, nor is it uncommon. Many small businesses struggling with cash flow fall into this category and have some tax debt repayment plan in place.
Another option for SME’s is to look at a lender like Sparrow Loans for tax debt business loans. Rather than dealing with the tax office, it’s best to pay them off and send them on their merry way so you can do what you do best and that’s focus on your business. Refinancing tax debts is an excellent option for many companies who have found themselves in this nasty yet manageable situation. It allows you to get on top of your tax debt without any penalties, interest or bad credit ratings.
If you’d like to refinance your business tax debt, you can apply online with no hassle, no fuss and no obligations by clicking here.
Or, if you’d like to talk to a real person at Sparrow Loans, Ulrika, your tax debt loan specialist, would be more than happy to chat on 1800 358 274.