Taking Control of Debt

Managing Business Tax Debt

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When you have tax to pay, it’s important that you pay it in full and on time. If you don’t pay when your Taxes are due, the ATO will apply general interest charge (GIC) on your unpaid amounts. It’s worth noting that the GIC is no longer tax deductible, so best to seek finance from other sources to ensure the debt is paid on time wherever possible. To help you stay on top of of your tax obligations here are a few tips.

Tips to prevent a business tax debt

Adopting good cash flow habits will help your business so you’re always ready to meet your tax obligations and prevent a tax debt.

The ATO provides some good tips to avoid getting your tax obligations caught up with your cash flow:

  • Use digital tools and software to automate and streamline your business operations. Look for tools or software that are designed to meet the needs of businesses like yours. For example, some tools can automatically calculate your live tax position as well as develop reports for GST, so you can spend less time on administration.
  • Set aside your GST, Pay as you go (PAYG) withholding and super from your cash flow so you have the funds available when it’s time to pay. Setting up another bank account for your tax and super, that’s separate to your business bank account, could help you with this.
  • Plan ahead by managing your cash flow, so you know when you may expect money to come in and go out, and can better budget for income and expenses.
  • Keep complete and accurate business records. Make sure you update them regularly (for example, every week or month) and remember to back up your digital records regularly too.
  • Use a registered tax professional. They can give you advice that’s tailored to your circumstances and help you manage your tax and super.

Free resources to help you get it right

It’s important to have a good understanding of your payment obligations so you can plan ahead and pay the correct amount at the right time.

You can increase your cash flow knowledge by taking advantage of Essentials to strengthen your small business – a learning platform specifically designed for small business. There are lots of free courses, and you can learn at a time that’s convenient to you. Our most popular courses include:

  • Goods and services tax (GST)
  • Cash flow for small business success
  • Strategies for improving your cash flow
  • Considering your small business viability

If you would like help in managing your tax debt or with managing cashflow, don’t hesitate to contact us at STS Accounting.