Follow taxation accounting procedures to improve business cash flow

Taxation accounting can be off-putting for small to medium businesses, in part because there are no simple answers - every business is different. Get it wrong and you could be in a financial mess. Get it right and you'll not only meet your legal obligations, you could also give your business a boost. Here are some taxation accounting pointers to get you on the right track.

Taxation accounting and business structure

Anthony Richardson, principal of Prompt Taxation & Accounting, says the first thing to work out is your business structure.

"Basically we go through the structure of the business - whether it's a sole trader, company or trust. That helps us determine a lot about their tax reporting requirements."

Business Activity Statements and taxation accounting

To work out if your business needs to lodge quarterly Business Activity Statements, or BAS, you first need to know your annual turnover.

"If you earn over $75,000 per annum you have to register for GST," Anthony says. "If you're under that, you can register but you are not compelled to."

While some businesses will have the option of monthly reporting, Anthony generally recommends quarterly reporting, as there's less compliance.

Keeping records and taxation accounting

If you are reporting on a quarterly basis, you will send to the Australian Tax Office (ATO) a completed Business Activity Statement. This means that come tax time, much of the work around expenses and deductions is already done.

Good record keeping is not just a time saver, it can also save you money, as late Business Activity Statements can attract a maximum $550 fine.

Complying with tax law and taxation accounting

Keeping good tax records is imperative, not only for the smooth functioning of your business, but it's also a legal requirement. According to the ATO, business records should be kept for five years after they are prepared.

If you need help with taxation accounting, the ATO offers free support for small businesses. They can help you identify your tax obligations and superannuation requirements and assist with using the ATO's online business portal.

What is payroll tax and am I liable for it?

Payroll tax is a tax levied on the wages paid by employers. It is applicable when the total wages paid to employees exceeds a certain limit. This limit varies for each state and territory, as does the rate of the tax applied, so check with your local revenue office what your obligations are.

Some organisations are exempt from payroll tax, but these are generally charities and non-profit entities.

Leave taxation accounting for professionals

"It's about getting the bookkeeping out of the business owner's hands and giving it to the experts to do," says Anthony.

Ask a taxation accounting professional today to identify your tax liabilities. It will save time and money and ensure you stay in the tax man's good books.