Business

How to beat tax debt with cashflow

©iStockphoto/Alonzo Adams

CURRENT reports from the ATO suggest two things are happening: they are getting tougher on people who have not paid their tax debts, and they now have the right to hold onto the refunds of businesses for no particular reason.

You've gotta love them!

If you have a tax liability that has been outstanding for many months, you can expect to receive increasing interest from the ATO debt collectors, unless you have a payment arrangement (and stick to it!).

For people who religiously pay their fair share of tax, the idea of the Tax Department getting serious about collecting outstanding debts will probably be met with applause.

Having dealt with many small businesses over the years, I have been able to view this issue from both sides of the fence.

It is amazing the situations that people can get into (through no fault of their own) and find themselves short of cash.

Sickness, divorce and death of family members can all conspire to derail the finances of any business owner, and on the flip side, so does unexpected growth in the business.

However, in most situations, the problem is simply a failure to effectively manage the business's cashflow.

And unfortunately, to meet your tax obligations, cash is a very necessary thing.

Here's a quick list of do's and don'ts:

1. Don't buy a boat.
I have seen many situations where a business owner has used business cash to purchase a boat (or a jet ski, jet boat, motorbike, and so on…), thinking that there was an unending supply of cash.

This is rarely true, and judgement day arrives far too soon, leaving you with a depreciating asset and cranky creditors.

2. Do keep good records.
If you are a regular reader of my column, you will recognise this as a recurring theme - but it really is so important!

Without good records, you will be operating your business by looking at the bank balance, and this is notoriously unreliable.

You need to know the profit of your business at any time, and how much of the bank account balance really belongs to you.

3. Do plan.
Again, a recurring theme! We all know that unexpected events will happen, and by their nature, cannot be built into any cashflow budget or business plan. However, if you have planned for the expected results, and allowed for some contingencies, you'll be in a far better place to cope with the unexpected. You might not be the world's best planner to start off with…but practice improves performance.

 

Following these tips will help you maintain a healthy cashflow, which ultimately will reduce your stress levels!

If you find that you are struggling with tax debt, there are many options available to help you.

Talking to your accountant is absolutely the first step - and don't delay, the ATO's interest rates are exorbitant! 

Topics:  ato, business, opinion, tax, tax refund


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Sara Connor trying to protect killed cop, says lawyer

Australian woman Sara Connor being interrogated at Denpasar District Court in Bali, Indonesia.  (AAP Image/Putra Sinulingga)

Byron Bay woman says she is not guilty of killing Wayan Sudarsa

Byron Bay Brewery will reopen next month

ENTERTAINMENT: For years, the Byron Bay Brewery has been an important venue for local artists to showcase their creations.

It has been closed for six weeks of renovations

Yann Martel on novels: "Like building cathedrals in the mind”

Yann Martel is a Canadian author best known for the Man Booker Prize-winning novel Life of Pi, an international bestseller published in more than 50 territories.

The writer of Life of Pi introduces his new novel in Byron Bay

Latest deals and offers

Priscilla is coming to Brunswick Heads

LOCAL iconing drag queen Maude Boate will host two special screenings

Sara Connor trying to protect killed cop, says lawyer

Australian woman Sara Connor being interrogated at Denpasar District Court in Bali, Indonesia.  (AAP Image/Putra Sinulingga)

Byron Bay woman says she is not guilty of killing Wayan Sudarsa

Byron Bay Brewery will reopen next month

ENTERTAINMENT: For years, the Byron Bay Brewery has been an important venue for local artists to showcase their creations.

It has been closed for six weeks of renovations

Yann Martel on novels: "Like building cathedrals in the mind”

Yann Martel is a Canadian author best known for the Man Booker Prize-winning novel Life of Pi, an international bestseller published in more than 50 territories.

The writer of Life of Pi introduces his new novel in Byron Bay

Our rail could roll again on Byron line

BACK IN THE DAY: The old motorail express leaving Byron. The picture comes from the book Time and Tide Again courtesey of W. Brian Alexander

Friends of the Byron Line will be founded today.

John Williamson winding up for another Gympie Muster

John Williamson is bringing some new songs and artists to this year's Muster.

John Williamson is back and ready to put on his best show ever

Priscilla is coming to Brunswick Heads

Northern Rivers gender illusionist Maude Boate (Michael Gates) promoting the upcoming screenings of Priscilla Queen of the Desert at the Brunswick Picture House.

Maude Boate will host two special screenings

Kanye West gets 'free reign' at VMAs

Kanye West has been let off the leash for the VMAs

Robbie Williams sings at manager's funeral

Robbie Williams and Lamar sang at the funeral of their manager

Twice as much Troy will please country music lovers

CATCH HIM WHILE YOU CAN: Singer Troy Cassar-Daley plans to take some time off to spend with family next year.

TROY Cassar-Daley is releasing a new album and book.

Courtney Stodden gets Reborn Doll

Courtney Stodden is trying to get over her recent miscarriage

Kate McKinnon 'destitute' before SNL

Kate McKinnon says she can't do anything but act

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

Investors eye Gladstone's $4m island with resort approval

UP FOR SALE: Turtle Island is on the market.

CHINESE and Sydney investors flag interest in Gladstone island.

Take a sneak peek at this $19m Whitsunday mansion

Mandalay House features a private helipad.

Mandalay is currently on the market with an asking price of $19m