17th May, 2024
With end of financial year (EOFY) looming, it’s the perfect time to give you some insights into what this period is like for an accountant.
Most people outside the accounting space assume that accountants must hate end of financial year.
“You must be so busy, you must hate dealing with the ATO, you probably can’t wait until it’s over” – the list goes on and on.
But that’s actually not the case. In fact, far from it.
EOFY can often cause stress and anxiety for the average business owner, so to help lighten the load, here are some common questions accountants receive.
Q: I hired someone last year and they’ve asked me why they can’t see their Income Statement in their myGov account … I’ve googled it but I really don’t understand what they are talking about.
So, you’ve hired an employee, you’ve been paying them into their bank account, BUT you haven’t issued them any payslips, you haven’t been withholding tax, you haven’t paid their super and you are worried about this income statement stuff?
Accountants sometimes see business owners hire employees without a care in the world for the underlying statutory requirements, and only find out about it after the fact.
Often this is because the business owners does their own bookkeeping, has never previously engaged with a bookkeeper or a accountant, and expects the accountant will now fix it all at EOFY.
Now, this is not a quick fix, and accountants will often be unwilling to take this kind of work on.
There can also be significant fines and penalties for not meeting the statutory requirements of employing staff.
Q: I have a real fear of the ATO, cashflow has been tight so I haven’t paid them. What’s the worst that can happen?
The worst that can happen is that the ATO can get rather annoyed that you haven’t paid your obligations. It can then issue a garnishee notice and withdraw the amount owing directly out of your bank account. The ATO can and will also levy fines and penalties for oustanding payment of obligations.
This will more than likely put you into a massive cashflow hole, leaving you unable to pay your employees or suppliers.
It’s always best to speak up, if you can’t your bookkeeper or accountant can act on your behalf with your permission. Small regular payments on a payment plan is so much better than sticking your head in the sand.
Q: I paid my kids school fees from my business account; can I get a deduction for that?
No.
Sadly, personal transactions are not business deductions.
This rule not only applies to the kids’ school fees, but your weekly pizza order, your new pair of shoes, your grocery trips, basically anything that is private or domestic in nature.
Anything that falls under this category is not a business cost, which means you can’t claim the GST and you can’t claim the deduction.
The moral of the story is to always maintain separate bank accounts for business and personal expenses whether your business structure is a sole trader, partnership, trust or company.
Q: We took the kids to Fiji on a holiday, and I wrote a blog post whilst I was sitting by the pool. Can I claim the cost of the holiday as a work trip?
Alas, no.
For a travel deduction to be legitimate, the purpose of the trip needs to be for business purposes.
There are reasons where an overseas holiday may be part business and part personal nature, but a fully itemised travel diary would need to be kept justifying your claim.
Q: I saw an ad on social media advertising tax services. The service was so cheap, but now the ATO say I haven’t lodged a tax return – help?
If it’s too good to be true, then it probably is.
To lodge a tax return in Australia, the person lodging the tax return needs to be a registered Tax Agent.
Sometimes, dodgy people advertise tax services on social media, take your money, have no intention of lodging your tax return, and they will vanish, never to be seen again.
You then need to pay a qualified professional to lodge your tax return, deal with the ATO because the tax return is now overdue and try to request a payment plan for a tax debt you didn’t know you had.
The moral here is to always use a qualified tax agent.
You can check if your accountant is a registered tax agent with the Tax Practitioner Board (TPB)
Whilst these questions may be asked often and quite innocently, the consequences of getting some of these things wrong can lead to not only financial penalties but also destruction of your brand reputation.
EOFY is not the only time you should be seeking the advice from your accountant or bookkeeper.
Use their skills throughout your business journey they have the knowledge, skills and experience to help you succeed.
Get comfortable asking these questions (and more), as the only stupid question is the one you have been too scared to ask.