The whitest lie ever told to aspiring small business owners and entrepreneurs is that hard work guarantees success.
Hard work is vital to success, but it’s not the only quotient. Perhaps too many small business owners have listened when starry-eyed blog writers and charismatic airbrushed suits telling them that they can’t lose if they try hard enough. Well, there are over 2.1 million small businesses in Australia, and a third of those will fail regardless of how hard they try. It’s a morbid truth, but it’s a truth nonetheless.
Another truth is that a lot of businesses fail because they don’t plan the tax side of things well enough. From PAYG Withholding tax to super guarantee contributions to GST, businesses have been blindsided by hefty penalties and tax debts because they put their obligations out of sight and out of mind.
Here are the five most common mistakes killing small businesses avoid these mistakes, and you will more than double your chances of making it.
- Not making sure you Pay your Employees Superannuation and on Time
When cash flow becomes an issue, too many businesses leave superannuation guarantee payments until last. If you want to avoid penalties from the ATO, you need to make sure your employees are paid superannuation when they need to be paid. You can’t risk late lodgements and you can’t risk not paying by the deadline it is an important part of being an employer.
If you have not paid your employee’s super contribution to a super fund on time you are liable for the Super Guarantee Charge (SGC) and hefty penalties of up to 200% payable. Late payments of Superannuation are not tax deductible.
At Accountant Ready Books our timely ‘Super Alerts’ will help you avoid regrettable scenarios.
2. Not getting the Status of your Workers Right
Not getting the engagement status of works right can land employers in unforeseen hot water.
As a Business Owner you make a lot of decisions when running your business. So, what about people that work for you? They’re contractors, right? YOU SURE?
Be careful! There are myths about what makes someone a contractor such as:
- Having an ABN
- Only being needed for short term work
- Simply agreeing to the arrangement
- Invoicing you for the work
- Just that everyone else in the industry call them a contractor.
It turns out that none of these things by themselves determines whether someone is a contractor or employee. It’s not a choice.
There are rules and every working arrangement may be different.
Getting it wrong could land you in trouble putting your business at risk of penalties.
There are key factors that determine the difference between an independent contractors and employee.
Talk to Accountant Ready Books today! for the possible options moving forward to get it right first time!
3. Not keeping Good Records
Good records means good business there’s no way around it.
Unfortunately, many a business has failed due to the lack of not recognising important elements in their business and by not keeping accurate records.
It is important and a requirement that a person carrying on a business to ‘keep’ all records that record and explain all transactions related to establishing, running and in selling your business. This includes one-off transactions and those that support the calculations and amounts you show in your GST, Super, PAYG and tax returns.
Records need to be kept for a minimum time for five years after they are prepared, obtained, or the transactions completed, whichever occurs last.
In English, or in a form that can be accessed and easily converted.
Talk Accountant Ready Books to today! on how we can assist you in the manner of keeping good records in such a simple way that will streamline your workflow and admin processes having a real impact and saving value benefit.
4. Not Understanding your Business Financial Literacy e.g.- Month-End
Month-End is the closing of all your processes which usually occurs on the last day of the calendar month. The month is officially closed when all of the month-end processes are completed to ensure all transactions are posted and will be reflected on reports. Procedures to be addressed so that to have relevance to the Month-End are Revenues and Expenses, Assets and Liabilities. Once confident that all the processing and transactions have been performed for Month-end close will enable the generating for the relevant period a Profit & Loss Statement with a layout as such that gives and finalises a snapshot of transactional activity for the period allowing for good quality information to be produced for better decision making.
At Accountant Ready Books our professional bookkeeping service teaches our clients how to make sense of the reports we give them for in today’s economic climate they need to be provided with the financial information quickly and efficiently to maintain effective control.
5. Not engaging a Professional Bookkeeper & BAS Agent Practice
It maybe that we are patting our own back but in reality, you cannot replace the human element a bookkeeper can bring to the life of a small business. Professional Certified Bookkeepers and BAS Agents perform a range of services and provide an assurance to business owners and management at a level that are not provided by others, proactively delivering what clients actually need and want. Accountants may be getting on the bandwagon and offering bookkeeping in their packaging but the creating a dedicated in-house bookkeeping business requires much more than someone sorting or shuffling numbers and papers, it requires a scorecard that is different from the traditional accounting practice.
Accountants can be great business advisors, but too many are too caught up in compliance and land grabbing bookkeeping services.
Here, at Accountant Ready Books we believe that the most efficient ways of doing things is for: Accountants do Accounting, Bookkeepers do bookkeeping just as Administrators do administrating and Sales people do sales. Bookkeepers and Accountants work together and are not in competition they recognise and respect the willingness to collaborate on service delivery to the client is what is required between both in todays connected business environment. The bookkeeping relationship is about the development of a quality synergetic relationship between the client and the client’s other business advisers, to provide an ongoing framework for business review, guidance and success. Small business owners are coming to the conclusion that having good financials consistently all year round is critical in keeping their cashflow stress levels at bay.
“If only I’d used a Bookkeeper and BAS agent!”
If-onlys are crippling for small businesses, and they’re avoidable.
Talk to Accountant Ready Books today! so, we can assist you to become more efficient, effective and profitable in your business. To know where you are up to financially and where you are heading answering the ultimate question –
– is all this effort of owning and running a business actually worth it?
Reference: https://www.accountantsdaily.com.au
