Happy new (financial) year! Now that we’ve all survived the year-end madness it’s time to turn back to business as usual, and when it comes to cashflow this probably means thinking about things like BAS and GST payments.
For many business owners it can be tempting to stick your head in the sand when it comes to your tax obligations – it’s just another thing that you need to get your head around and don’t have the time to focus on. It won’t matter if you’re a bit late, right? (Wrong!) Maybe you know you don’t quite have the cash you need to pay your instalments, so you think if you don’t lodge you can buy yourself some time before you have to find the cash. Unfortunately in this case ignorance is definitely not bliss, and here’s why.
While the ATO is pretty supportive of small business in many ways, failing to lodge your BAS and failing to pay what you owe means they won’t be your friend for long. And it looks like they’re cracking down on SMEs that fail to meet their obligations.
As I explored in this LinkedIn article, failing to pay your tax debt can get serious very quickly, often affecting your credit score (and therefore your ability to get finance in the future) and it can even lead to your financial institution freezing your accounts without warning. Not good.
If you’re worried you won’t be able to meet lodgement deadlines (or you won’t be able to pay what you owe) the best thing you can do is take charge of the situation. Have a chat with your accountant to get clear on exactly where you stand and then, with their help, reach out to the ATO and let them know what’s going on. They may be able to offer you an extension to lodge, plus they’re open to payment plans to manage any outstanding debts – but they need to know what those debts are before they’ll enter into a plan. That means lodging everything you need to.
It’s also worth noting that if you enter into a payment plan the ATO will apply your tax refunds directly to your debt to help pay it down, and once you agree to a payment plan you’re obligated to lodge everything on time or they can cancel it (which makes the debt immediately due).
Juggling the finances to keep cash flowing can be one of the most stressful aspects of running a small business, but it doesn’t have to be all doom and gloom.
If you need help managing a debt or would like to finance new or used plant, equipment, or vehicles to help keep your business running smoothly, give me a call on 0412 534 503.
