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What Is Cloud-Based Accounting and What Are Its Benefits

Cloud-based accounting is a term used to describe storing and accessing financial data and records in the cloud. This type of accounting offers many advantages over traditional on-premises accounting, including increased flexibility, scalability, and collaboration.

What Is the Cloud?

The cloud is a remote server network used to store, manage, and process data. Cloud-based applications and services are delivered over the internet and can be accessed anywhere.

What Are the Benefits of Cloud-Based Accounting?

Cloud-based accounting is a growing trend in the business world. more and more businesses are moving to the cloud to take advantage of its many benefits. Here are just a few of the benefits of cloud-based accounting:

1. Cost-Savings

One of the biggest benefits of cloud-based accounting is that it can save money. You don’t have to invest in expensive hardware or software with cloud-based accounting. Instead, you can access your accounting software from any internet-connected device.

2. Anytime, Anywhere Access

Another great benefit of cloud-based accounting is that it gives you access to your financial data anytime, anywhere. With cloud-based accounting, you can check your financials from anywhere, anytime. This is a huge benefit for businesses that have employees working remotely or who travel frequently.

3. Automatic Updates

With cloud-based accounting, you’ll never have to worry about manually updating your software. That’s because updates are automatically pushed to your system, so you’ll always have the latest version.

4. Scalability

Cloud-based accounting is also highly scalable. That means it can grow with your business. As your business expands, you can easily add more users and features to your system.

5. Enhanced Security

When it comes to security, cloud-based accounting is second to none. With cloud-based accounting, your data is stored on secure servers in a professional data centre. That means it’s protected from natural disasters, power outages, and other potential threats.

6. Better Collaboration

Cloud-based accounting also makes it easy for you to collaborate with your team. With cloud-based accounting, multiple users can access and update your financial data in real time. That means you can quickly and easily share information with your accountant, bookkeeper, or financial advisor.

7. Improved Cash Flow

One of the benefits of cloud-based accounting is that it can help you improve your cash flow. With cloud-based accounting, you can easily track invoices and payments. That way, you can stay on top of your receivables and keep your cash flow healthy.

8. Comprehensive Reporting

Another great thing about cloud-based accounting is that it provides comprehensive reporting. With cloud-based accounting, you can track your financial data in real-time. That way, you can easily see how your business performs and make informed decisions about your finances.

9. Improved Customer Service

One of the benefits of cloud-based accounting is that it can help you improve your customer service. With cloud-based accounting, you can give your customers real-time access to your financial data. That way, they can easily track their invoices and payments.

Conclusion

Cloud-based accounting is a great way for businesses to keep track of their finances and ensure that they comply with tax laws. It is also a cost-effective solution for small businesses that may not have the resources to invest in an on-premises accounting system.

If you are looking for accounting firms in Sunshine Coast, you can hire us at SMB Accounting. We offer various accounting services for all small business needs. Get in touch with us to learn more.

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What to Expect During an ATO Audit

It can be a very daunting experience to be audited by the ATO. The process can be quite confusing and frustrating, especially if you don’t know what to expect. But there’s really nothing to worry about if you’re prepared and you know what will come up during the audit process. This guide should help you know what to expect from an ATO audit, so you get ready.

What the ATO Looks for When Auditing a Business

The ATO is the Australian Taxation Office, responsible for collecting taxes and enforcing tax laws in Australia. When a business is selected for an audit, the ATO will look at the business’ tax returns and financial records to ensure that the business is complying with tax laws. The ATO may also issue penalties if they find any discrepancies.

There are a few things that the ATO looks for when auditing a business:

1. Accurate Record-Keeping

The ATO will want to see that your business is keeping accurate records of its income and expenses. This includes both financial and non-financial records. Financial records include things like invoices, receipts, bank statements, and tax returns. Non-financial records include things like employee records, customer records, and inventory records.

2. Compliance with Tax Laws

During the audit process, one of the first things the ATO will want to see is whether or not your business is complying with all relevant tax laws. This includes things like paying the correct amount of tax, filing correct and complete tax returns, and keeping accurate records of income and expenses.

3. Proper Classification of Expenses

One of the most common issues the ATO finds during audits is businesses incorrectly claiming expenses. The ATO will want to see that your business is only claiming expenses that are legitimate business expenses and that they have been properly classified. This means that expenses should be classified according to their purpose and not lumped together into one general category. For example, expenses for advertising should be classified as advertising expenses and not as general business expenses.

4. Reasonableness of Expenses

In addition to the proper classification of expenses, the ATO will also want to see that the expenses your business claims are reasonable. This means that the expenses are not excessive and that they are in line with what other businesses in your industry would spend on similar items. For example, a small business is not likely to have expenses for first-class travel or luxury hotels.

5. Proper Documentation

The ATO will want to see that your business has documentation to support its expenses. This includes things like receipts, invoices, and bank statements. The ATO may disallow expenses that are not properly documented.

Preparing for an ATO Audit

If you’re a small business owner, it’s important to be prepared for an ATO audit. Here are a few tips to help you get through an audit with minimal stress:

Know Your Rights – The first step is to educate yourself on your rights during an ATO audit. You have the right to legal representation, and you should also familiarise yourself with the ATO’s audit process.

Gather Your Records – The ATO will request a range of documents and records during an audit. These may include your financial records, tax returns, GST returns, payroll records and superannuation records.

Be Prepared to Answer Questions – The ATO auditor will ask you a range of questions about your business. It’s important to be prepared to answer these questions and to have supporting documentation to back up your answers.

Cooperate with the Auditor – It’s important to cooperate with the ATO auditor, as this will make the audit process go more smoothly. However, you should also know when to draw the line – if you feel like you’re being interrogated or treated unfairly, you can always seek legal representation.

Conclusion

An ATO audit can be a stressful experience for small business owners – but if you’re properly prepared, you should be able to get through it unscathed. If you’re worried about an upcoming audit, it’s always a good idea to get in touch with a tax professional who can help you understand your rights and obligations.

You don’t have to power through an audit all by yourself. You can always hire an accountant in Sunshine Coast to help you prepare for it and make sure you have everything in order. That’s what SMB Accounting is here for. We offer a range of accounting services, including business advice, taxation and Quickbooks consulting. With our help, you don’t have to worry about surprise audits by the ATO. Reach out to us today and let our business accountants in Sunshine Coast assist you.

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A Comprehehensive Bookkeeping Guide for Small Businesses

A business audit evaluates a company’s financial statements and records. Audits are typically performed by an outside party, such as an accountant or financial institution. Businesses are usually required to have an audit performed on an annual basis.

An audit is basically a comprehensive review of your business’s financial records. This includes going over your income and expenses and your assets and liabilities. The purpose of an audit is to ensure that your financial records are accurate and up-to-date.

Conducting an audit can be beneficial for a number of reasons. For one, it can help you identify areas where your business may be losing money. Additionally, an audit can also help you spot any potential errors or irregularities in your financial records. Keep reading to learn more about audit and overall bookkeeping for your small business. 

What Happens in an Audit 

A business audit is an in-depth examination of a company’s financial records to ensure they are accurate. This process involves reviewing financial statements and ledgers to ensure all figures are correct. 

An audit can assist businesses in finding any errors or discrepancies in their accounting, which can lead to issues with financial reporting and more difficulties in correcting mistakes later on. Additionally, an audit can help businesses keep track of their overall financial health, assisting them in setting future goals.

Internal and External Audits 

An internal audit is an evaluation of a company’s financial reporting by someone within the company. Internal audits are often done as a preventative measure to catch any mistakes in financial reporting. They are not as formal as an external audit, but they are still useful in monitoring a company’s progress towards its goals.

External audits are conducted by registered company auditors not associated with the business being audited. The auditor looks at the business’s financial records to make a judgement about their accuracy and organisation. 

The Corporations Act 2001 requires that businesses are audited following the Australian Auditing Standards. This means that a transparency report should be created to show the review results to companies. 

If you are a public company or a company with more than 20 shareholders, you are required to have an annual audit. However, we recommend that all businesses, no matter their size, get into the habit of having an audit at least once a year. Not only will this give you an in-depth look into the financial health of your business, but it will also help you to identify any potential risks or areas of improvement.

The auditor will assess your internal controls and procedures to ensure they are adequate and effective. Once the audit is complete, the auditor will issue a report detailing their findings and recommendations.

The Importance of a Small Business Audit

Auditing is crucial because it helps ensure that financial statements are accurate and consistent. This, in turn, helps avoid penalties from the Australian Taxation Office (ATO). Additionally, regular auditing can help prevent record-keeping from becoming sloppy or disorganised.

It is important to have an audit if you want to improve your business’s efficiency and internal controls. An external audit is a great way to have your operation evaluated by professional accountants and tax agents who understand a business’ finances to a higher degree and can alert you to any issues or where your practices aren’t up to standard.

Internal audits are conducted by a company’s staff and are usually less comprehensive than external audits. Internal audits typically focus on specific areas of concern, such as compliance with company policies or procedures. 

Conclusion 

Bookkeeping for small businesses is a critical task that should not be overlooked. Small business owners must keep track of their finances to ensure that their business runs smoothly and efficiently. There are many different bookkeeping methods, such as conducting audits to help small business owners with this task. The most important thing is to find a system that works best for you and your business.

If you need auditors in Brisbane, turn to SMB Accounting. Our business does individual tax returns, small business accounting with various small business accounting packages available, SMSF audits (self-managed super funds), as well as a Xero accounting software-based accounting business. Get in touch with us!

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Tax Refunds and Returns in Australia: Why Is It Too Low?

It’s that time of year again. You’ve filed your taxes and are eagerly awaiting your tax refund. But when the refund arrives, it’s much lower than you expected. Why is your tax refund so low? 

If you pay tax on the portion of your taxable income that is subject to tax and you are considered an Australian resident for income tax purposes, you may be qualified for both of the following:

  • tax offset for low-income individuals
  • tax reductions for low- and middle-income earners

You are not obliged to finish a specific tax return section to benefit from these tax reductions. Once you’ve filed your tax return, accountants figure out your tax offset for you.

You won’t get the offset as a separate payment; if you are qualified, it will be a part of your tax return, and the amount will be reflected on your notice of assessment.

The prospect of a tax refund is all the more appealing given that Australia is now experiencing a recession due to the pandemic.

However, a tax consultant from Australia has cautioned that there are several reasons why taxpayers who are entitled to refunds this year may get less money than they had anticipated.

Almost eight out of ten Australians who submit tax returns are eligible for a cash refund. But for some of us, the return we are entitled to is far smaller than we had anticipated.

How Do Tax Refunds Work in Australia?

Every year, about 14 million people in Australia submit tax returns. Only about two-thirds of eligible people receive a refund, and the average amount is slightly over $4,000.

As a result, a total of $3 billion is reimbursed. As a result, you should be certain that you are making all the necessary efforts to maximise your return.

To avoid penalties, you must file your income tax returns by October 31. (Alternatively, you could be eligible for an extension over this deadline if you register with a tax professional before October 31.)

The return processing will take about two weeks, although your agent can update you on its status anytime.

These due dates will remain the same, and COVID-19 will not impact how you typically file your tax return. Because of the Low and Middle-Income Tax Offset available to many taxpayers, you could get a larger tax refund this year.

Why Is Your Tax Return Less?

According to the ATO’s most recent timetable, many taxpayers have already begun receiving tax refunds. But one of the questions that keep coming up is why it is at such a low level.

Or, to put it another way, why is the amount of the return payment so much less than what was anticipated when compared to the sums received in previous years?

Refunds have decreased between 8% and 10% from the previous year, according to information provided by the ATO.

It is possible that, when comparing your tax return from one year to the next, the total amount will be lower due to different circumstances.

The amount of your refund you are eligible to receive may be lowered if your income changes or if you cease to qualify for a tax credit or deduction.

It would help if you weren’t concerned since it’s conceivable that getting a lower tax refund will be beneficial in the long run. 

Even if you consider your tax refund “found money,” a more realistic comparison would be the situation in which you contribute money to the government without obtaining any interest in return.

When comparing their refund from one year to the next, many taxpayers are astonished to discover that their return has drastically decreased.

Your tax refund may need to be altered if your financial condition has recently changed. These alterations may include It’s crucial to prepare as much as possible to prevent getting caught off guard by a surprise occurrence.

Why Your Tax Refund Is Lower Than Expected

Due to changes made to their withholdings at the beginning of 2018, some taxpayers began receiving larger paychecks, which resulted in their paying less tax for the whole year.

Some taxpayers will pay less in total taxes due to the adjustment, but they might not get their entire anticipated tax refund.

Another result of the tax reform that was put into place at the end of 2017 is that the ATO modified the data that businesses use to estimate how much tax should be withheld from employees’ paychecks after the beginning of the year.

As a result, for certain employees whose withholding was based on out-of-date tax laws, some refunds and quantities payable were different from what they had been in recent years.

Conclusion 

There are a few reasons why your tax refund may be lower than expected. Firstly, the ATO may have made an error when processing your tax return on the sunshine coast. Secondly, you may have had deductions or offsets applied to your refund. Finally, the amount of tax you paid during the year may have been higher than usual, resulting in a lower refund.

If you are concerned that your tax refund is too low, you should contact the ATO and a tax consultant to discuss your options.

SMB Accounting offers services for individual income tax returns, small-business accounting using a variety of small-business accounting products, SMSF audits (self-managed super funds), and an accounting firm based on the Xero accounting software. In addition, we provide audits for trust accounts, nonprofit organisations, special needs audits, audits of financial statements for specific purposes, and more. Contact us if you have queries about your tax! 

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DIN—What It Is, Why You Need It, and How to Obtain It

As part of the 2020 Budget Digital Business Plan, the Australian government wants to implement the Modernising Business Registers program. In this program, the ABRS (Australian Business Registry Services) was to be established to help businesses register and manage the information they share with the government. This is to be rolled out between 2021 to 2024, and the first change is that directors need to get a DIN (Director Identification Number).

Today, we want to shed light on the DIN to help you understand what it is, why you need it, and how to obtain it:

What is a DIN?

The DIN is a unique identification number for a director in the business industry. This number will make it easy for the government and businesses to identify a director by name. The identification number is mandatory for the directors of certain businesses and companies, the Australian Taxation Office (ATO), and the Australian Securities and Investments Commission (ASIC).

Why Do We Need a DIN?

As part of the Modernising Business Registers program, the DIN is being introduced as a way to help the government identify directors. This will help them track directors of Australian companies and enable the officers to gather information about the director.

If a director doesn’t have a DIN, they won’t be able to open one. This is because the government will be using the DIN when they verify the identity of directors using an online portal that they will use to register businesses.

How to Get a DIN?

If you want to register a business, you must get a DIN. Here is how to do it:

Step #1 – Determine if you need a DIN

As mentioned earlier, the DIN is mandatory for the directors of certain businesses, including companies, the ATO and the ASIC. This means that if you are running a business that requires a DIN, you need to get one. The DINs can be obtained using an online portal. To register for a DIN, you need a MyGov account. You can set one up as soon as you know you need a DIN.

If you are the director of a public company, you will have to apply for a PBN (person business number) instead of a DIN.

Step #2 – Register for a DIN

To register for a DIN, you need to visit the Government Gateway. This is an online portal that will allow you to complete the registration process. To start, you will need the following:

Go to this link Director ID Regsitration

Go through the instructions and you may need to collect some of your personal information eg

  • Personal details, including your name and date of birth
  • Your business registration details, including business name and ABN (Australian Business Number)
  • Your email address
  • The bank account details where you want to receive the DIN
  • Biometrics such as a numeric device and a photograph

Step #3 – Receive your DIN

After you enter the required information and successfully register for a DIN, you will receive an email from the government. The email that you will receive will be from myGov and not the Department of Home Affairs, which also handles business registrations. This is why you should always check the source of the email and the link. The link in the email will take you to the Government Gateway, where you will be asked to verify your identity.

After you have verified your identity, you will receive the DIN in your bank account. The government will deposit the DIN in your bank account without any deductions.

Conclusion

In an effort to help the government identify directors, the Australian government has decided to roll out the DIN. The introduction of this identification number is part of the 2020 Budget Digital Business Plan. If you are running a business and is the appointed director, you should consider obtaining a DIN. It is compulsory, so get yours as soon as possible to avoid any trouble!

SMB Accounting offers individual tax returns, small business accounting, and various other services to help companies stay on top of their finances and obligations. If you are looking for accountants in South East Queensland to help you with obtaining a DIN, work with us today!

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What You Need to Know Regarding SMSF Audits: A Guide

During tax season, self-managed superannuation funds (SMSFs) are subject to several financial and compliance checks. SMSFs may qualify for tax breaks on investment income if specific requirements are met. 

One of these regulations mandates that an authorised SMSF auditor conduct an annual audit of SMSFs. This article will give a thorough introduction to SMSF auditing. 

What Exactly Is an SMSF Audit?

Before submitting annual tax returns, SMSF holders must undergo an annual audit. An ASIC-registered auditor performs an SMSF audit to verify the financial statements’ accuracy and your fund’s compliance with superannuation laws.

The Australian Taxation Office (ATO) mandates an audit even in cases where no contributions or payments were made during the fiscal year. The auditor will provide a letter of engagement outlining the scope of their work during the audit. You have 14 days to respond if more information is needed. 

Another excellent way to make sure that there are no mistakes or inaccurate numbers in calculations that could harm your fund is to have them reviewed by a knowledgeable and objective specialist.

Why SMSF Audits Are Necessary

For several reasons, your SMSF must comply with super law. If funds fail to recognise and address compliance problems, the ATO may impose significant financial penalties on them. 

Numerous SMSF regulations are additionally intended to safeguard you and ensure that your investments comply with the fund’s definition. You can avoid compliance fines and investment losses by using an audit to help you find strategic flaws in your fund.

According to the ATO, an annual SMSF audit is necessary before submitting a yearly return. A few essential steps must be taken to ensure all deadlines are met. According to the ATO website, you must appoint an SMSF auditor at least 45 days before your annual return is due. You will be subject to financial penalties if you do not file your tax return by the deadline.

What Happens during an SMSF Audit?

SMSF auditors examine an SMSF’s operations for financial and compliance issues as part of their auditing process. According to Australian Auditing Standards, the fund’s financial statements are audited (balance sheet, income statement, and member statement). The compliance audit determines how well the fund complies with all relevant superannuation laws.

Following the conclusion of these financial and compliance audits, an SMSF auditor must complete an independent auditor’s report document provided by the ATO. Within 28 days of the auditor receiving all required documentation, the trustees must receive this report. 

SMSF trustees should act quickly to fix any violations with the help of their auditor. A fund’s audited annual return must be submitted to the ATO, and trustees are mandated by law to ensure that all related taxes are paid in full.

Auditors must use a contravention report document provided by the ATO to report any super legislation violations (contraventions) to the ATO within 28 days of their discovery during the compliance audit. Trustees should use the ATO’s SMSF early engagement and voluntary disclosure service if any breaches go unresolved.

The ATO will take the voluntary disclosure of any violations by SMSF trustees into account when determining the range of penalties it may impose after opening its investigation.

Conclusion

By law, trustees of SMSFs must have their funds audited by an independent SMSF auditor to ensure ongoing compliance with Australian super laws. ATO has the power to impose a range of sanctions for noncompliance, depending on the severity of the violation.

SMB Accounting is the firm for you if you are an accounting firm looking for highly efficient and comprehensive audit work. We are one of the leading SMSF audit firms. Our offices complete audits for accountants all over Australia with a guaranteed 24-hour turnaround time. All work is completed in-house, with NO outsourcing.

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Top 7 Common Myths on Hiring Accounting Services, Debunked

Accounting business services are often shrouded in mystery, with many people believing some myths about them. In reality, however, accounting business services are vital to any business and can provide some benefits.

You may have heard a lot of myths about accounting firms on the Sunshine Coast. Here are some of the most common myths:

Myth: Accounting Firms Exclusively Handle Tax Preparation and Accounting

Contrary to common belief, it is untrue in practice. Professional small business tax accounting in Australia considers your organisation’s health in addition to addressing your taxes. 

Make sure you generate enough revenue and effectively handle the accounting processes.

They are responsible for some tasks. Accounting is used for more than just tax accounting. 

Financial accounting, the creation of financial statements, cash management, auditing, and assurance services are other key accounting characteristics. These features require some activities and processes.

Myth: Manual Bookkeeping Might Result in Financial Savings

Nobody would choose to forfeit money in favour of foolishness. Some accounting firms in Australia provide cost-effective corporate accounting services to assist small and medium enterprises with their accounting and tax requirements.

Therefore, there is no rationale for performing every task by hand, as doing so would make things more difficult. 

With cutting-edge software solutions like XERO, QuickBooks, etc. Many top accounting companies in Melbourne can assist you in automating all financial management tasks for your business.

Myth: Small Firms Don’t Require the Assistance of Accountants

Regardless of the company’s size, we must make every effort to ensure its financial stability. The most important enterprises are little ones. Melbourne’s small companies have suffered greatly due to the pandemic’s effects, such as lockdowns and market restrictions, as well as its sudden arrival.

Three alternatives are left for small business owners and startups: do it yourself, hire someone, or outsource it to an accounting service provider. The greatest choice among the alternatives for small firms is to hire an accountant on Sunshine Coast. 

Myth: Using A Third-Party Accounting Firm Costs a Lot Of Money

This is completely untrue. When you manage to account internally, you must pay for an expensive specialist resource. In addition to perks like paid time off, insurance, and payroll taxes, they also receive a paycheck from you.

However, you must make a project-based or hourly payment if you outsource your accounting requirements. By doing this, you pay for your efficient and helpful services. Additionally, it allows you more time to concentrate on tasks that increase your revenue and clientele.

Myth: Employing an Accountant Can Boost Output

Professional accountants on Sunshine Coast, QLD on staff full-time would undoubtedly increase productivity and help firms save money. The best option is not to hire someone to supervise accounting operations and use accounting software to check the accuracy of the job generated.

You can experience pressure if you have a small team of accountants and a limited quantity of time. Hiring a full-time employee costs money, and expanding your staff does not ensure faster business success.

Myth: Companies Should Give Accounting First Priority Throughout Tax Season

The tax season causes a significant rise in stress for many business owners. The unfamiliar may become lost in the sea of taxes, exclusions, rules, deadlines, and compliance.

While paying close attention to your money daily is required to maintain a strong financial position for your company, it is crucial. Businesses often utilise accounting services to spot irregularities and prepare for unforeseen financial problems.

Myth: It’s Challenging to Choose the Best Accounting Partner

Small firms are sustained by their ability to manage their finances and preserve market competitiveness successfully. This occasionally calls for hiring anybody who comes your way.

The best accounting firms aim to give you more control over your employment choices. With the help of these suggestions, you may streamline the procedure and be ready for the most challenging parts of choosing an accounting firm.

Conclusion 

There are many myths surrounding accounting and business services. However, these myths are often unfounded and based on misinformation. With the right information and guidance, businesses can save time and money by outsourcing their accounting and business services needs.

SMB Accounting offers services for individual tax returns, small-business accounting using a variety of small-business accounting products, SMSF audits (self-managed super funds), and an accounting firm based on the Xero accounting software. In addition, we provide audits for trust accounts, nonprofit organisations, special needs audits, audits of financial statements for specific purposes, and more. Hire our accountants on Sunshine Coast QLD today!

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5 Ways to Avoid Triggering Small Business Tax Audit

Running a small business is hard enough without worrying about the possibility of being audited by the tax authorities. However, it is important to understand the process of a small business tax audit in Australia, as well as the triggers that can lead to an audit, in order to be prepared when your business is picked for an audit.

The Australian Taxation Office or ATO is responsible for conducting tax audits on small businesses. The ATO has a risk assessment process that it uses to select companies for audit, and a number of factors can trigger an audit.

These triggers include things like a business having a large number of cash transactions, not declaring all of its income, or claiming excessive deductions. Here are some ways that can avoid triggering small business tax audits in Australia:

1) Rightly Declare Taxable Income 

All businesses in Australia are required to declare their taxable income to the ATO. This means reporting all of the revenue that your business earns. If your business is picked for an audit and the ATO finds that you have not declared all of your income, you may be liable for penalties and interest charges. Thus, find the accountants that make the right declarations.

2) Perform Within Industry Benchmarks

When your business is performing better than most businesses in your industry, it is likely to draw the attention of the ATO. Benchmarks are set by the ATO for companies in each sector and are based on a variety of factors, including turnover, profitability, and cash flow. If your business is performing significantly better than the benchmarks, it warrants an audit.

3) Match BAS Items to Annual Tax Returns

If the items on your Business Activity Statements (BAS) do not match up with those on your annual tax return, it will trigger an audit. This is because the ATO uses the BAS to reconcile the GST that businesses have collected with the GST that they have reported. Any discrepancy may be an indicator of GST fraud.

4) Avoid Late or Underpaid Superannuation

When you have a history of late or underpaid superannuation, you are likely to be audited. The ATO is cracking down on superannuation compliance among different small businesses, so you must make sure that all of your employees’ super is appropriately paid on time and in full.

5) Have On-Time ATO Lodgements

If you have a history of late or non-lodgement of returns, you will be a prime candidate for an audit. The ATO will take this as an indication that you are trying to avoid paying taxes or hiding something from them. To avoid an audit, lodge your returns on time and in full.

6) Claim Appropriate Deductions

Businesses can claim deductions for various expenses, such as business travel and marketing. However, the ATO may disallow deductions if they are unreasonable. Businesses can claim excessive deductions are more likely to be underreporting their taxable income. To avoid this, make sure that all deductions are necessary and can be supported by documentation. 

Conclusion

In conclusion, it is pretty important to understand the triggers for a small business tax audit in Australia to avoid any potential penalties. By being aware of such triggers, you can minimise the risk of being audited.

Seeking a tax professional to avoid small business audit triggers? SMB Accounting in Australia does individual tax returns, small business accounting, SMSF audits, and more. Get in touch with us today!

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Audit Requirements of Not-For-Profits: What You Need to Know

Not-for-profit businesses are businesses that are set up for a social or environmental cause rather than to make a profit. They are usually registered as charities, and there are over 56,000 registered charities in Australia. Not-for-profit businesses are important because they help to empower social and economic growth. However, they can sometimes be bogged down by tedious audits. To help with this issue, we thought it would be useful to put together a brief article about this subject. If this is something that you’re interested in learning more about, read on as we break down everything you need to know about audit requirements for not-for-profits.

ACNC Requirements

ACNC registered charities that make more than $250,000 a year have to give the ACNC financial statements within six months of the end of the financial year. Companies that are limited by guarantee and registered with the ACNC only have to give the ACNC annual reports, not ASIC.

Funding Obligations

If your not-for-profit organization is grant-funded, you may be required to have your accounts audited annually by a registered company auditor. This would be regardless of your annual revenue.

Constitution 

If an organization has a requirement for an audit specified in their constitution or rules, they will need to have their accounts audited by a registered company auditor. This is regardless of the organization’s annual revenue.

Incorporated Associations

State or Territory regulators require associations to provide an annual report which details the association’s financial activity. For associations registered with the ACNC, this requirement is reduced to only reporting to the ACNC. If an association is not registered with the ACNC, they are required to submit an annual statement and audited financial statement within six months of the end of the financial year.

In order to be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC), organisations must meet certain requirements. One of these requirements is that they must report to the ACNC annually. For charities based in the Australian Capital Territory (ACT), South Australia or Tasmania, this means reporting to both the ACNC and the relevant state regulator. Charities based in other jurisdictions must only report to the ACNC.

If you are incorporated in NSW, you will need to lodge a Summary of Financial Affairs with NSW Fair Trading. This must be done within one month of your AGM or within seven months of the end of your financial year, whichever is later. Tier 1 organisations, which are those with revenue exceeding $250,000 or current assets exceeding $500,000, must also provide audited financial statements

Organisations in Victoria that make less than $250,000 a year don’t have to report their finances to anyone. If they make between $250,000 and $1 million, they can choose to have their accounts reviewed or audited, but they don’t have to. If they make more than $1 million, they must have an audit and they have to give their financial statements to Consumer Affairs Victoria.

Companies in Queensland must submit an annual return and financial statements to the state government within one month of their annual general meeting (AGM). Financial statements must be either audited by a registered company auditor or verified by a certified accountant.

Incorporated associations in the Northern Territory must submit their financial statements to the AGM within 28 days. The audit requirements for these associations are less strict than in other states and are based on tiers.

Conclusion

We hope this article helps you gain a better understanding of the audit process for non-for-profit businesses. While it may seem complicated at first, the information above should help you navigate the audit requirements with ease.

If you’re looking for help with the audit process, then you’ve come to the right place. SMB Accounting is fast becoming one of the leaders in Australia when it comes to providing accounting services. As an accounting firm serving Brisbane, Sunshine Coast, and Fraser Coast, we help clients by providing business advice, taxation, and XERO/MYOB/Quickbooks consulting. Whenever you need help managing your income tax returns or keeping your finances in check, SMB Accounting is the one to call. Contact us today to get started.

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Handling Late or Previous Year Tax Returns

Being a business owner means staying organised and on top of your taxes. This can be incredibly challenging during the off-season when business is slower. If you are behind on your late or previous year’s tax returns, don’t worry – there are ways to handle it.

Check out these few tips we’ve listed below to help you get started.

How Much Do I Have to Pay as a Penalty for Not Lodging My Tax Returns?

It is necessary to recall that the tax system is in place to help ensure everyone contributes their fair share. If you don’t lodge your tax returns, you may be penalised. The penalty cost will depend on several factors, including how late you are in lodgment, whether you have a history of non-compliance and the severity of your case. 

If you lodge your returns late, you may still be eligible for a remission of the punishment. The ATO has various solutions available, so it’s essential to get in touch with them  as soon as possible to discuss your situation.

Can Penalties Be Deferred?

While it’s essential to stay on top of your tax returns and pay any tax debts you may have, the ATO understands the fact that life can sometimes get in the way. 

If you notice yourself in a position where you have missed the lodgement deadline, they are likely to waive any penalties if you have a good history of lodgement and payment. However, if you have multiple returns outstanding or an account of non-payment, they are less likely to be lenient. 

In these cases, a tax professional can assist you in getting back on track as soon as possible is essential to avoid further penalties and interest charges. Taking care of your tax obligations is critical to being a responsible adult, so make sure you stay on top of it!

However, if you have more than one return left and a bad history of paying tax debts, chances are slim that they will relieve your penalty.

What’s the Danger of Failing to Lodge Tax Returns?

The ATO imposes a failure to lodge a time (FTL) penalty for each income tax return (including activity statements) that is late. The ATO uses an automated system to calculate and issue FTL penalties.

You may be subject to a late filing penalty if you’re late filing your return late. The fine is $222 of the unpaid tax for every 28 days the return is late. The ATO may also issue an administrative penalty of up to $5,000 for each return lodged late if it believes the late lodgment was deliberate or careless.

If you cannot lodge your return on time, you should contact the ATO as soon as possible to discuss what to do with your situation.

Conclusion

There are a few distinct approaches that you can handle your taxes if you end up filing them late or from a previous year. You can file an extension, which will give you more time to file your taxes but won’t necessarily waive any penalties or interest that you may owe. You can also file your taxes electronically, which can help to speed up the process.

If you own a lodge and have filed your taxes late or have previous year’s tax returns, it is strongly recommended that you hire an accountant and tax consultant. A tax advisor or Sunshine Coast accountant from SMB Accounting can help you ensure that you are compliant with tax laws and regulations and can also help you maximise your deductions and tax benefits. Book a meeting with us today!

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