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Small Business Success and ATO Compliance

Posted 7 Sep '21

How do you define your business success?

It could be an obvious measure like growth, hitting a certain profit margin, getting an ideal number of staff, or maybe just having a well-oiled machine that doesn’t rely on you to manage absolutely every aspect.

In whatever way you measure your business success, the parts of the equation that always need to be considered in your business strategy are your numbers, and the compliance obligations of running your small business.

Tracking your numbers and compliance

Without any tracking or reporting in place, it’s hard to truly know if your business is performing the way it needs, to get what you want. It’s possible to be feel busy and overwhelmed in your business, while staying stagnant in performance, and not moving forward toward your goals.

A great time to check in on your business performance is at the end of each quarter, as this is when your BAS and Super obligations are due.

Having a quarterly review process allows you to ensure you are hitting the sales you need, not overspending in any areas of your business and have enough cash in the bank for your lodgement obligations.

To assist your quarterly tracking, we’ve complied 4 easy steps to tracking your success and staying ATO compliant.

4 Steps to tracking your business success and staying ATO compliant

1. Know your dates

BAS and Super are two important ATO obligations due each quarter, that need to be prioritised to ensure you can operate a successful business, no matter what your goals are. We’ve seen firsthand how hard it can be for small business owners to get back on track after falling behind with these lodgements.

Being held back, by old or unmanageable debts makes it harder to focus on important growth strategies and improvements in your business.

2. Prepare to lodge your BAS/Super in time

By the end of each quarter, you should have all transactions in your Xero file reconciled and ready for your BAS to be lodged (you use Xero right?!). An easy way to help you with this is by using a program like Dext, or the Xero app to attach receipts/invoices to each purpose for ATO compliance. Not to mention these add on programs completely streamline the data entry process for you, saving time and hassle.

As well as BAS compliance, Super guarantee is another ATO obligation that is so important to keep on-top of. Getting behind on your employer super payments, opens you up for ATO audit and investigation which can hit your business with unexpected fines and penalties.

Having your payroll up to date and STP filed will ensure that you are reporting your obligations correctly and assist in calculating Superannuation liability is accurate for the quarter.

The best tip we can give is to set money aside for these obligations to ensure you are covered. We always recommend opening a separate tax savings bank account, to help visually keep the money separated.

3. Review your numbers with these reports

The following reports help tell the story of your business performance. They will assist you in knowing how much you need to save for your obligations, track your expenditure, your profit margins, sales trends, employment costs and much more.

Knowing how to generate these reports in your accounting software is one thing, understanding what numbers are most important for your business is where the value lies! For assistance with this contact an Empire advisor today.

Profit & Loss

This report shows your sales income, gross profit on jobs, operating expenses, and net profit
– Start by running a comparison to previous periods (months/quarters) to be able to see trends in your business
– Are your sales going up or down?
– Are you making or losing money each period?
– Do you have any strange looking transactions that might be mis-coded or incorrect?
– Are your expenses consistent each month?
– Have you missed anything? Check this by comparing each month (e.g., is there a rent expense each month? Have your wages been run?)

Balance Sheet

This report assists you in checking how much you own vs how much you owe

– How much GST do you owe? Do you have enough money put away?
– How much Superannuation do you owe?
– How much PAYG Withholdings do you owe?
– Do you have cash in the bank?
– Tangible assets does the business own?

Aged Receivables Report

This report shows your outstanding invoices

– Do you have any old outstanding invoices? Should these be chased up or even sent to Debt Collection?

Aged Payables Report

This report shows your outstanding invoices owed to suppliers

– Have you missed paying any supplier payments?
– Are you waiting on any credits from Suppliers?
– Are there any duplicates or anything that needs to be cleared out?

4. Check in with your advisor

Above all, having a trusted advisor to discuss your quarterly results with can help you pinpoint areas of obvious discrepancies or issues, understand your cash position and most importantly plan for improvement or next steps needed to achieve your goals.

How can Empire help you?

The team at Empire Bookkeeping can assist you with Xero or Dext establishment, training and reporting assistance.

The team at Empire Accountants can get you started with a planning and strategy session to identify your goals for the next financial year or discuss quarterly accountability meetings with you.

Please reach out to us today and let’s start building your empire together.

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