Managing business tax liabilities is a complicated task. However, it’s also one of your most important duties. Tax debts can incur serious consequences if left unpaid. Thus, it is important to be proactive when managing this debt.
Prioritising Your Tax Debt
It’s important to consider all your cash flows and review what payments you can afford and what you cannot. Having a well-planned timeline helps you stay ahead of the game. You can also set up a budget to put funds aside to fulfill business tax debt obligations.
Be Wary Of Your Financial Situation
The ATO recommends that businesses review their financial situation frequently to ensure they meet all tax obligations. So, start by reviewing your financial records and see what you owe and what’s owed to you. This helps to identify potential cash flow issues and allow you to find solutions to solve them on time.
Submitting Your Returns And Activity Statements On Time
It is not in the ATO’s interest to collect debts to the point where it hurts your business. However, penalties issued by the ATO can seriously damage your credit score and cash flows in the long run.
Hence, even if you can’t pay on time, submitting your return on time is important smart. There are separate penalties if you fail to submit on time.
If you can’t make your claims in time, your first step should be contacting the ATO to see if you can get an extension. This way, you can avoid paying additional penalties later on.
Make Sure You Receive Payments On Time
Getting late payments from your customers can slow down your ability to make payments. Late payments make it challenging to clear off your business tax debts and relevant expenses. Thus, if you have slow-paying customers, review your payment terms and debtor management strategies. There are tools that can be utilised within existing software or added to software (add-ons) to help with this.
Setting up a payment plan
Support is available if you are unable to pay on time. Setting up a payment plan with the ATO for unpaid tax debt helps to take control of your finances. This way, you can review what is owed and choose a realistic payment plan.
The periodic repayments should be manageable even with charged interest on the plan.
It’s important to meet repayments as per the payment plan; otherwise, the ATO can take legal action to recover the business tax debt.
Getting expert advice
Trusted advisors can help you navigate your business finances and debt. We provide in-depth support and help you understand your business obligations to make informed decisions and we are able to contact the ATO on your behalf. Further we have a team of advisors who can help you budget and plan to better manage your cash flow.
Call us today at our Orange office on 02 6362 1533 or our Molong office on 02 6366 8049