Small business accounting and the ATO
For any small business owner there will come a time when your business will experience a downturn in activity and hence a lack of cash flow. (This is not meant to scare you, it is just a matter of understanding the life cycle of business). This can happen for many different reasons and in my small business accounting experience, the outcome is nearly always the same. The ATO is put to the bottom of the to-do list or the bottom of the inbox.
The upshot is that businesses fail to lodge activity statements and tax returns for fear of alerting the ATO to an income tax or GST obligation. Let me tell you that this is definitely not the way to go. The ATO debt will exist whether you lodge the required forms or not. In fact, not lodging forms will only end up in being hit with late lodgement penalties, which can be quite significant. It is always best to come clean and lodge on time. By doing so, you will not only avoid late lodgement penalties but it will also give you and your small business accountant a better insight into where you currently stand. Then from that point on, we can work together with the ATO to get you back on track. Payment arrangements are increasingly being used to assist in paying off debts when the need arises, but be wary of using the ATO as a source of funding, this is not what payment arrangements are for. Be wary that broken payment arrangements also make it much harder to negotiate with the ATO in the future if the need ever arises again.