Do you get caught up in the day-to-day tasks of running your business and then find that you are falling behind on business activity statement (BAS) payments? You’re not alone. Commissioner of Taxation, Rob Heferen, has indicated that small businesses owe two thirds of collectable tax. With 74% of that debt relating to business activity statements (BAS). The ATO is becoming less tolerant of tax debt because as businesses fall behind in their payments, it becomes harder for them to get back on top of their tax obligations and remain viable.
Why do businesses fall behind on BAS payments?
Our clients cite a variety of reasons, but the most common challenges are:
We’re too busy
The daily operating tasks to meet the product and service demands of the business are all-consuming. Therefore, your administration and financial tasks are relegated to the ‘I’ll get to it later’ pile. Especially tasks like bank reconciliations. Where the preference is to do them without interruptions and when the office is quiet. When are there ever no interruptions?
We’re worried about paying the bill
The annual cycles of fluctuating sales demand, weather delaying jobs and bulk purchases of inventory are some of the factors that impact cash flow. These can make for a fine balancing act to meet all your financial obligations, as well as paying your tax bill, and often business owners opt to deprioritise their tax commitments. While the ATO acknowledges how vital small businesses are to the Australian economy, they do expect everyone to do the right thing and contribute their fair share of taxes.
How can you get your BAS payments on track?
If having the time to manage bank reconciliations and bookkeeping tasks is your concern, then the team at ABA Advice Beyond Accounting can save you time and stress by taking care of these tasks for you. We can discuss exactly what you need and prepare a suitable bookkeeping proposal for you. This will also give you the peace of mind to focus on the product and service priorities for your business, knowing that your books are kept in good order.
If cash flow and the ability to make BAS payments is your concern, the team at ABA can customise a proposal that will support you by including preparation of a budget and cash flow statements for you. In addition, we can calculate what BAS amounts you can reasonably afford to pay to the ATO every month. Then we will organise a payment plan with the ATO for you. This gives you clarity and confidence around meeting all your financial commitments, not only your tax obligations. As well as the benefit of saving you the precious time of having to manage these calculations and negotiations yourself.
By the same token, if you have other reasons for struggling to meet your compliance obligations, you can discuss these with the ABA team and we can work out the best solution for your circumstances.
You can also read our article on why we are chasing you for BAS information.
Important notes about falling behind on BAS payments
The ATO is more responsive and accommodating with businesses that contact them early and negotiate a payment plan for their BAS’s. Rather than defaulting on BAS payments and then requesting a payment plan.
The same applies for existing payment plans. If you pay your BAS late under a payment plan, it will default, and you must set up a new payment plan. Therefore, it’s better to renegotiate a payment plan before the BAS due date.
In addition, bear in mind that if you apply for finance, and you have outstanding BAS or tax lodgements, your application for finance will be denied.
Not to mention the ATO charges interest on overdue amounts, currently 11.34%, and they calculate it daily. Ouch!
Get on top of your BAS payments now
The best time to overcome these challenges and get your BAS payments sorted is now! Don’t risk getting further behind and increasing the pressure on yourself and your business.
We have the knowledge and the experience at managing these situations and are ready to help your business get back on track to positive financial growth. Contact the ABA team to set up a meeting so that you can stop wrestling with taxes and get back to doing what you love!
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