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.

Cancer fight gets UGLY at Top Pub

CLOSE CUT: Steve Bates (right) takes a pair of clippers to Peter Law.

Duty manager Kerry McAuliffe raises over $9000.

Labor Senator slams O'Dowd on backpacker tax

Queensland Senator Anthony Chisholm.

Senator Anthony Chisholm says Ken O'Dowd wants "a bob each way".

Bill Kenning's Roweiner wins Thangool Cup

HOME STRETCH: Lushness (left) leads Race 6 at Thangool on Saturday.

Slow turf leads to nine-length upset.

Local Partners

Cattle judging draws crowds at Moura Coal & Country Festival

Kenrol Brahman Stud won Most Successful Exhibitor.

Breast cancer survivors give back to supporters

SUPPORTERS: From left: Jane Henney, Tessa Ives, Mandy Sanderson, Lyn Witham and Sandra Grummit at September 3's BCNA fundraiser.

Biloela fundraiser brings in more than $4200 for BCNA.

Cancer fight gets UGLY at Top Pub

CLOSE CUT: Steve Bates (right) takes a pair of clippers to Peter Law.

Duty manager Kerry McAuliffe raises over $9000.

Labor Senator slams O'Dowd on backpacker tax

Queensland Senator Anthony Chisholm.

Senator Anthony Chisholm says Ken O'Dowd wants "a bob each way".

Bill Kenning's Roweiner wins Thangool Cup

HOME STRETCH: Lushness (left) leads Race 6 at Thangool on Saturday.

Slow turf leads to nine-length upset.

Rideout aims for home win at Thangool

Owner-trainer Damien Rideout (right) with race 6 contender Lushness. Photo Andrew Thorpe / Central Telegraph

Local owner-trainer eyes possible victory in race 6.

Champion trainer eyes Thangool Cup

CHASING THE CUP: Trainer John Manzelmann with jockey David Simmons who will ride Mishani Stealth on Saturday.

John Manzelmann's Mishani Stealth is the horse to beat.

Biloela Cockatoos win back to back premierships

The Biloela Cockatoos are the CQRU reserve grade premiers for 2016.Photo Andrew Thorpe / Central Telegraph

Cockatoos defeat Mount Morgan 33-29 in extra-time thriller.

Classic car auction draws buyers from US, Dubai

"He wants everyone to enjoy the cars, the collection got too big'

Michael Palin: Terry Jones dementia is 'painful' to see

Michael Palin has found Terry Jones' decline "painful to watch"

Daniel Radcliffe hoped for haircut anonymity

Radcliffe thought shaving his head would make him more anonymous

Jim Carrey slams 'shameful greed' of lawsuit

Jim Carrey has slammed the "shameful greed" of White's ex-husband.

'Highly unlikely' Brad Pitt will face prosecution

It is highly unlikely that Brad Pitt will be prosecuted

WATCH: Justin Bieber grabbed in Germany

A video has emerged of singer Justin Bieber being attacked

Why The Wrong Girl is right for Jessica Marais

Jessica Marais and Ian Meadows in a scene from the TV series The Wrong Girl.

ACTOR makes the sometimes awkward character her own in new comedy.

Property 200m from ocean selling for just over $100K

BEACHCOMBER PARK: Work has started on a new $19.2 million development at Toogoom.

The estate's developer is offering huge discounts for early buyers.

UPDATE: Former rodeo champ's sale rained out, now back on

Larkhill local Ken Consiglio is having an auction of most of the things on his property.

'People kept showing up and we had to turn them away'

First stages of $25 million housing development underway

New development on Madsen Rd - The Springs.

The blocks of land are much bigger than usual

Couple build their own 'tiny house' for $45k

Holly Bowen and Oli Bucher built their "tiny house" themselves, only hiring a plumber and an electrician. Photo/supplied

The house, which is built on a trailer and can be towed.

Rocky proves prime real estate in latest REIQ report

Kas Woch sold this Wood St home in Depot Hill for $107,000 in August.

A new investor's market as Rocky house prices hit lowest in state

Sunshine Beach property breaks real estate record

The property overlooks Sunshine Beach, as the backyard lawn meets the sand.

Sunshine Beach mansion sale smashes real estate record