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Avoid these small business tax errors

Unwanted attention and penalties from the ATO can jeopardise your small business.

Protect your business by avoiding these common small business tax errors.

Not using an accountant
Tax laws frequently change, and compliance requirements can be time-consuming and demanding. A registered tax agent will streamline your financial processes, provide advice on maximising your finances and keep you compliant.

Inaccurate tax returns
Small businesses that do not declare their income and deductions accurately will attract the ATO’s attention and financial penalties. All foreign income, capital gains tax, business sales and bank interest must be declared. You must also have legitimate evidence supporting your tax deduction claims.

Poor record keeping
Businesses that fail to keep accurate records will struggle to remain compliant. It is vital to keep:

Incorrect superannuation payments
The ATO will sanction employers that fail to pay their employees’ superannuation correctly and on time. Make your mandatory quarterly payments are paid at the correct rate of 9.5 per cent of your employee’s pay. The cash-flow benefits of delaying super payments and missing deadlines are not worth the financial and criminal punishments incurred by frequent breaches.

Posted on 14 December '18 by , under Tax.

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Superfund categories and what they mean

There are four different categories of super funds. These have different primary features and are more applicable to certain people than they are to others.

Retail super funds

Anyone can join retail funds. They are mostly run by banks and investment companies:

  • Allow for a wide range of investment options.
  • Financial advisors may recommend this type of fund as they receive commissions or might get paid fees for them.
  • Although they usually range from medium to high cost, there may be low-cost alternatives.
  • The companies that own these funds will aim to keep some of the profit they yield

Industry super funds

Anyone can join bigger industry funds, but smaller ones may only be open to people in certain industries i.e. health.

  • Most are accumulation funds but some older ones may have defined benefit members
  • Range from low to medium cost
  • Not-for-profit, so all profits are put back into the fund

Public sector super funds

Only available for government employees

  • Employers contribute more than the 9.5% minimum
  • Modest range of investment choices
  • Newer members are usually in an accumulation fund, but many of the long-term members have defined benefits
  • Low fees
  • Profits are put back into the fund

Corporate super funds

Arranged by employers for employees. Large companies may operate corporate funds under the board of trustees. Some corporate funds are operated by retail or industry funds, but availability is restricted to employees

  • If managed by bigger fund, wide range of investment options
  • Older funds have defined benefits, but most are accumulation funds
  • Low to medium costs for large employers, could be high cost for small employers

Self-managed super funds

Private super fund you manage yourself. Many more nuances to this type of fund. Most prominent feature is the autonomy over investment.

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