What Common Mistakes to Avoid When Filing Tax Returns?

It is important to lodge a tax return every year. However, not everyone is an expert in preparing and filing tax returns properly. Many people make mistakes when they file tax returns because they don't have enough knowledge about tax matters. For this reason, small business accountants in Melbourne are being hired by many companies. When small businesses make mistakes during tax season, they don’t know how to tackle those mistakes. Keep reading this blog to learn about tax return amendments and common mistakes that can be removed during tax season.

What are Tax Return Amendments?

A tax return amendment acts as a correction to tax returns that you previously filed. It is a chance for taxpayers to resolve mistakes in their tax returns to reflect correct changes in the tax returns. Another advantage of tax return amendments is that they may correct deductions and income. The ATO accepts tax return amendments within the specified time limits to allow taxpayers to adhere to tax laws. If you don’t know how to lodge or amend your tax return, you can seek help from tax accountants for small business in Melbourne.

Mistakes Small Business Owners Make When Filing Tax Returns

When you notice that you made a mistake while filing your tax return, you don’t need to panic. First of all, it is recommended to seek help from expert tax accountants because they know how to lodge tax returns without making any mistakes. Furthermore, if you tried to file a tax return on your own and made a mistake, you should ask for expert advice. Take a look at the following points to know what mistakes you should avoid when preparing and filing tax returns:

• Claiming Tax Deductions You are not eligible for

According to the ATO, tax deductions can be claimed by Australian citizens. No doubt that they go after taxpayers who don’t show their profit overseas to avoid paying taxes. You should also know that they also consider checking your accounts and financial transactions. Now, the ATO looks after every item that you claim for deductions. You will be targeted by the ATO if the deductions seem to be too high with no receipts for the same. A small business accountant can help you claim the rightful deductions.

• Not Paying Taxes on Time

You can manage your cash flow and reduce the stress of paying annual taxes by making prepayments. If you want to make prepayments, then you can do this at any time when you want. However, even if you are not paying tax returns on the specified date, then you have to pay a penalty along with your taxes. To avoid this, hire a tax accountant who will be responsible for paying taxes on time on your behalf.

• Not Keeping Financial Records

Even a small business has a fair amount to keep everything organised ahead of tax season. If you keep your documents organised throughout the year, then they can make the tax season smooth for you. An accountant can help you keep track of all financial activity throughout the year and simplify your yearly tax returns. To manage your business books, you can hire a Melbourne bookkeeper for your company. The following are important documents that you need to maintain:

• Credit card statements

• Sales receipts

• Expense invoices

• Bank statements

• Records of superannuation, wages, contracts of employees, and tax declarations

• A list of your debtors and creditors

• Not Seeking Help from a Tax Accountant

An expert tax agent knows alternative solutions for all types of tax problems. They know how to prepare and file tax returns on your behalf. They also know about possible tax deductions that your business can claim. If you want to hire an accountant near your area, you can also search for a small business accountant near me.

Conclusion

Tax time doesn’t need to be stressful. Your tax season can be smooth and stress-free if you have organised and accurate records that need to be used when filing tax returns. If you don’t know how to prepare and file tax returns, you should get help from an expert tax accountant. For more accounting solutions for your company, you can reach Reliable Melbourne Accountants.

Payroll Tax: What is It and Why is It Important to Pay?

If you are a business owner, you must know about payroll tax from the moment when you hire your first employee. It is for employers and based on the amount of the monthly wages paid to the temporary, permanent and casual employees and certain contractors. You can seek help from taxation accountants if you find difficulty understanding payroll taxes. To know more about payroll tax and its importance, keep reading this blog:

What is Payroll Tax?

Payroll taxes are considered financial obligations you and your employees are liable to pay. There are several types of payroll taxes – some are paid to the federal government and others are paid to the territory or state authorities. When it comes to the payroll tax, it is paid to the territory and state authorities on the money that employees earn. Being an employer, you need to calculate an estimate of those taxes and pay them to the government authorities on your employees’ behalf. If you don’t know how to calculate payroll tax, you can opt for taxation services where a tax accountant will help you.

What do You Need to Register for Payroll Tax?

If you are registering for payroll taxes, then you might have to submit a few details. Once you start entering details, they can’t be undone. Usually, you need:

• Australian Business Number (ABN)

• Contact, address, and bank details

• The date when you first employed staff

• All payments to employees for the existing/current year and the four previous years, including:

1. Fringe benefits

2. Wages and salaries

3. Termination payments

4. Allowances

5. Contractor payments

6. Director fees

7. Commissions and bounces

8. Shares and options

9. Employer superannuation contributions

You can hire Australian taxation accountants for your company so you can rely on them for payroll taxes. The detail that you need to provide while registering for payroll tax may differ from state to territory.

Why is It Important to Pay Payroll Tax?

When you think of payroll tax, it is important for the proper functioning of the tax system. State, territory and federal authorities depend on the employers to accurately calculate, evaluate, and submit taxes to ensure the tax system is operating properly. If you don’t have enough time to look after these types of taxes for your business, then it is advisable to seek help from taxation accounting services. Payroll tax finances the territory or state’s budget where the workers work. It also ensures that employees don’t need to pay a total sum of taxes at the end of the financial year.

Is There Any Difference Between Income Tax and Payroll Tax?

Yes, income tax and payroll tax both are different. The primary difference between income tax and the payroll tax is that payroll tax depends on the amount you pay your employees and contractors as wage. On the other hand, income tax depends on the business’s taxable earnings. When you or your taxation accountant in Melbourne calculate your payroll tax, then your company’s income is not considered.

Do You Need to Pay Taxes on Payroll?

As an employer, you are required to pay taxes on the payroll if your total payroll exceeds or meets a threshold that is usually determined by your territory and state authority. When the tax is collected and paid by the employer, it means the amount is coming from the employees’ wages. You can check whether you meet or exceed a threshold according to the limit set by your state or territory authority. Thus, it is important to understand the federal regulations and state or territory authority to know where you have a tax obligation. Despite this, you need to have accurate business books before you calculate to pay any tax. For this purpose, it is advisable to hire a Melbourne bookkeeper.

Conclusion

You need to have an extensive amount of knowledge to ensure the accuracy of payroll taxes. If you want to make sure that your company calculates and submits your payroll taxes on time and accurately, then it would be the best idea to hire a tax accountant for your company. If you are running a business, it is important for you to pay all types of taxes to which you are liable to avoid any type of penalty or fine. Moreover, you can also seek help from Reliable Melbourne Accountants for accounting solutions for your business. 

What Happens If You Fail to Lodge A Tax Return On Time?

Regardless of whether you are a small business owner or a big enterprise owner, if you lodge a tax return after the due date, then you may get into trouble. The ATO has stringent rules and regulations and everyone has to follow all those rules. If someone tries to break those rules, then they may have to pay fines or penalties. 

In the case of the taxation process, if you are filing a tax return late or forget to lodge a tax return due to any reason, then the ATO (Australian Taxation Office) will issue a failure to lodge (FTL) notice. If you are managing a company’s tax returns on your own, then it might become difficult for you to manage everything on your own when your business starts growing. Thus, it would be better to hire accounting services for businesses. Keep reading this blog to know why you may receive FTL notice and what can be done at a later stage.

What is Failure to Lodge (FTL) Notice?

A failure to lodge is a notice issued by the Australian taxation office (ATO) to those who are required to file a tax return, report or statement by a specific date but fail to do so. Australians who fail to lodge their tax returns on time could face this issue. However, every time you don't need to pay fines or penalties because of late lodgment of the tax return. Generally, the ATO consider personal circumstances before deciding on issuing FTL or taking further action.

On the other hand, if you have a professional tax accountant, then you can be sure that your company’s tax returns will be paid on time, and you don’t need to worry about it. For this reason, many business owners and individuals opt for accounting services in Melbourne so they can avoid paying unnecessary amounts on taxes.

Why Would You Receive a Failure to Lodge Notice?

If your tax return has not been filed on the agreed date to the ATO, you will receive a warning, and the warning can be either in writing or on the phone to notify you that you haven’t lodged your tax return. FTL penalties can be applied to the lodgments written below:

• FBT returns

• Tax returns

• Penalty for not lodging activity statement on time

• Single touch payroll reports

• Taxable payment annual reports

• Annual GST returns

Additional manual penalties or fines can be applied if taxpayers ignore requests for lodgment. To avoid paying these types of penalties, you should pay taxes on time, or you can hire accounting solutions for your company near your area by searching ‘accounting services near me.’

How is FTL Penalty Calculated?

FTL penalties can vary, and it will depend on the size of the entity and the length of time that has passed after the due date for lodgment.

• Small Entities

At the rate of a single penalty unit, FTL penalties are calculated for each 28-day period that the tax return is overdue. The penalty can be applied up to 5 penalty units.

• Medium Entities

For medium entities, the penalty unit which is applied to small entities is multiplied by 2. Medium entities are considered medium withholders for PAYG, which have assessable income or GST turnover of more than $1 million, but it would be less than $20 million.

• Large Entities

In the case of large entities, the penalty unit is multiplied by 5. A large entity is defined as a large withholder for PAYG, which has assessable income or GST turnover of $20 million or more.

• Significant Entities

For significant entities, penalties are multiplied by 500. Such penalties have applied on or after 1 July 2017 to significant entities that have failed to lodge approved forms on a specified date.

If you have already prepared financial transaction records, then it will be easy for accountants to lodge a tax return on time. For this purpose, you should take help from the Melbourne bookkeeper to record all financial transactions so they can give those records to the accountant for taxation process.

Can You Ask for a Remission for FTL Penalties?

A taxpayer can reduce or avoid penalties by requesting FTL penalty remission. Remissions are of two types:

• In full

• In part, if there are exceptional or extenuating circumstances – for instance, if you fail to lodge a tax return on time because of a natural disaster or serious illness.

Once taxpayers’ outstanding statements or returns have been lodged, they can request FTL remission. The ATO can reduce or remit the penalty based on individual circumstances. The best method to avoid paying penalties is by lodging tax returns on time and if you don’t have time, then you can opt for accounting services where your accountant will do it for you.

Conclusion

The blog shares information on failure to lodge notice and what can be done if you receive this type of notice from the ATO. For further detail regarding this, you can also contact Reliable Melbourne Accountants.

What do You Need to Know about PAYG Instalments?

When it comes to different types of taxes that every business owner must know, then many business owners consider Pay As You Go (PAYG) tax instalments self-explanatory. However, there are some important points that you need to consider as a business owner, especially if you are new to the system. If you are a startup business owner, then it might seem difficult for you to manage PAYG tax instalments, but you don’t need to worry about them if you have a reliable tax accountant. If you don’t have one yet, then you can look for a professional tax agent Melbourne.

The ATO has different methods that taxpayers use to pay their annual taxes. Generally, the PAYG scheme was introduced to create tax instalments on regular basis for individuals that meet specific criteria. As a result, it can be considered controlled and manageable tax payments. To know more about PAYG instalments, keep reading this blog:

What are Pay As You Go (PAYG) Instalments?

PAYG instalments are referred to as payments that you make on taxes for business and investment income. In simple words, if you are running a business or investing and making above the annual income threshold, then you need to opt for PAYG instalments. To keep a healthy cash flow, it is important to plan ahead for the end of the financial year. In this situation, PAYG instalments can help you. You can also ask a tax agent about PAYG instalments if you are unaware of them. For this, you can also search for ‘tax agent near me’ to find a tax agent near your location to lodge your tax returns.

How do PAYG Instalments Work?

Generally, you need to pay PAYG instalments once every 3 months. The amount that you need to pay will be based on your investment and business income. As a result, you can avoid large tax bills after you file your income tax return. If you pay PAYG instalments even then, you have to file an annual income tax return. You can plan ahead, manage your cash flow, and budget for tax costs.

Usually, PAYG instalments are made during the year to evaluate and check whether the company owes more tax or is due for a tax refund. The sum of tax liability is calculated when the yearly income tax return is determined at the end of the financial year. The ATO will notify companies and people who have to pay PAYG instalments. If you have an experienced tax agent, then they can keep you updated regarding this. However, if you haven’t hired one, then you can search for the best tax agent Melbourne.

PAYG Withholding vs. PAYG Instalments

Basically, there are two kinds of PAYG tax payment methods – PAYG withholding and PAYG Instalments. You need to understand the basic difference between PAYG instalments and PAYG withholding for tax purposes.

• PAYG Instalments or PAYG – I: in this type of tax payment, an employer is responsible for withholding an employee’s tax and pays the tax on the behalf of the contractor or employee to the Australian Tax Office.

• PAYG Withholding or PAYG – W: in this type of tax payment, a business owner or sole trader makes payments once every 3 months to the ATO and this payment will be based on their investment or business income.

You can also search for an online tax agent Melbourne to get details about tax returns, PAYG instalments, PAYG withholding, etc. You can also take help from them to know how you can pay PAYG instalments.

How to PAYG Instalments?

There are two methods that you can use to pay the PAYG instalments:

• Automatic Entry

If you surpass an income threshold, then you will be automatically liable to PAYG instalments. The ATO will notify you that you have been enrolled in PAYG. They will also notify you about how much you have to pay and the date when you have to file your tax returns.

• Voluntary Entry

You will be liable to voluntary entry when you sign up for PAYG before you get enrolled for the PAYG by the ATO automatically. The individual can plan and enroll in the PAYG instalments before they meet the ATO thresholds. Voluntary entry is relevant for firms or sole traders who got a huge profit or are new to the business.

Before you pay any type of tax, it is important to have an accurate financial transaction record, and the Melbourne bookkeeper can better do it for you. These records are used by tax accountants to prepare and lodge a tax return.

Conclusion

The blog is all about PAYG instalments and now, you may have an idea about what exactly PAYG instalments are and how they can benefit you. Moreover, for more details, you can also contact Reliable Melbourne Accountants.