Are you struggling with paying off your business tax debt?
As a business owner, one of the best ways to make sure you’re in good relations with the ATO is to pay your taxes on time. However, you’re human, so there’s always a chance that you forget or you don’t have the funds available to pay by the due date.
So what can you do if you find yourself in a situation where you have have to deal with debt?
In today’s 2 Minute Accountant, I’m going to share with you a few things you can avoid if you can’t pay your business tax debt when it’s due.
So stay tuned!
How to prevent business tax debt?
Business owners, here are some of the most important taxes you’ll need to deal with on a regular basis:
- GST (Goods and Services Tax) This isn’t necessarily a tax debt, but you have to pay it to the Tax Department.
- Income tax
- PAYG (Pay as you go) withholding, which is the employees’ tax
Tip: Whether you do your tax reporting monthly, quarterly or yearly, make sure you report on time.
[ctt template=”7″ link=”n40f2″ via=”no” ]Tip: Whether you do your tax reporting monthly, quarterly or yearly, make sure you report on time.[/ctt]
What happens if you cannot pay your debts?
Never bury your head in the sand! Facing your debt problem is the best way to deal with it.
Tip: Deal with your business tax debts upfront!
If you don’t report your financial situation when you’re supposed to (or within a three-month time frame), you, as a business director, can be personally liable for superannuation and PAYG withholding.
Here’s an example:
You’re the company director. You’ve put your accountant in charge of lodging in the forms on time. The only problem is they haven’t done it on time.
You, as a director, can be personally liable.
So make sure your business’ tax reporting has been done on time or at least within that three-month time frame. Double or triple check it it you need to.
You might also be interested in: How Can Small Businesses Deal With Debt Drain Issues?
What if you can’t pay off your debt?
Here are a few things you can do:
- put more money into the business
- borrow money
- make a deal with the Tax Department
Don’t be afraid to make a deal with the Tax Department. They are pretty reasonable. They want you to pay your tax debts.
The ATO is open to helping you solve your business’ debt issues by putting you on a payment plan. But here’s the important thing – you have to keep your word!
It’s important to always mean what you say, particularly when dealing with the ATO.
You might be interested in: When Can I Expect to Receive My Business Tax Refund?
Keep in mind
If you have business tax debt, try to cut a deal with the ATO. If you haven’t made an arrangement with them, they will refer you to a credit reference agency. So don’t rush into anything before you know the exact implications.
My advice is to take your time and ask for professional advice. Business debt can be tricky, stressful and time-consuming. It’s important to ask for the right advice in order to make an informed decision that will impact your business’ future.
Come and talk to a professional about your business tax debt. Our specialists at Shuriken Consulting are happy to assist in creating a personalised plan to help you get your business out of debt. Let’s get in touch today!