At the end of every financial year, business owners get incredibly busy as they have to lodge their tax return. Working closely with tax agents and accountants, they have to get everything in order before the end of the filing period. But since filing tax returns is no simple task, sometimes mistakes are made.
It can be as simple as not having all the required records. This is why businesses need to start getting their affairs in order 2-3 months before the end of the financial year.
In this post, we will list some common issues associated with filing small-business tax returns and some tips to avoid them.
What are the most common errors made when completing tax returns?
The Australian Taxation Office (ATO) identified the most common mistakes that small businesses make when filing their tax returns. These include failing to declare income including cash and online sales, interest, capital, dividends, gains, and one-off transactions for selling equipment, and other capital items. Failing to account for the private use of business assets or funds (including stock taken for private use and shareholder loans) is another common mistake.
The ATO also observed that small businesses fail to have adequate record-keeping systems. When completing tax returns, they have to keep all required records. Otherwise, they might have to redo the whole thing.
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