Home Articles How to avoid the top five mistakes businesses make at tax time

How to avoid the top five mistakes businesses make at tax time

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It’s that time of year again. Where did the past 11.5 months go?

Yes, it’s the end of financial year (EOFY). Again.

The Institute of Public Accountants (IPA) and MYOB surveyed their members, who are some of Australia’s leading EOFY experts, to discover the biggest mistakes the businesses make at this time of year.

The survey revealed that 4 per cent of Accountant’s clients were not prepared at all for the looming EOFY. The accountants surveyed said that about 40 per cent of their clients try to be organised but still needed to do much more preparation to be really ready.

Top five mistakes

So, what are the top five mistakes that business make in their EOFY statements?

The survey results showed that a growing proportion of businesses are not regularly working with their accountants or using accounting software to do a lot of the prep work for them.

The biggest mistakes being made are:

1. Miscoding bank transactions (65%), this is the same as last year’s survey results.

2. Not keeping accounts and records up-to-date throughout the year (58%), slightly down on 62% last year.

3. No contact with their accountant over the financial year (58%), up from 42%.

4. Not providing enough detailed or supporting information (49%), down on 64%.

5. Not being fully trained up on accounting software functionality (46%), up from 39%

How to avoid these mistakes

Some of these mistakes are easily avoided. It’s not that hard to keep in contact with your accountant, especially given quarterly BAS reporting requirements.

But, other major decisions made by the business should also be placed on the radar of your accountant. If your business is selling land, buying or selling share or, changing its assets in any way, inform your accountant early. Plus, your accountant will be across any changes to tax, reporting requirements or other tax tips that may help a business owner.

Being organised is the next recommendation made by accountants. If your business financials are organised then, it’s easier to respond to requests for information in a timely manner. Plus, the information that is provided will be clear and consistent – something accountants and the ATO really like.

Many small business owners and sole traders find the administration of their finances a burden. The best advice is to ensure that you have a good accountant and, that you work with them to ensure that your business tax reporting is ready for the drop dead date of June 30 each year.

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