Talking Cents

Tips to avoid being audited

Often during tax season, it can be a stressful time for business owners. Not everyone does the right thing when it comes to tax returns. As such, the ATO has had to set up an auditing system, to make sure everyone is treated fairly, and nothing suspicious is happening. Here at M.A.S Partners, the leading small business accounting firm, we understand the stress business owners go under when they are being audited- even if they have done nothing wrong- and understand the steps they should take to avoid being audited in the future. As such, we have provided some tips that will help you prevent this in the future.

Lodge your tax returns on time
The easiest way to avoid being audited is to always lodge your tax returns on time. Staying on top of your tax returns and allowing a sufficient amount of time to lodge your documents will lead to less mistakes and will also make it less likely for you to get audited. Often when you rush to lodge your tax returns, you are bound to have mistaken. Any mistakes will come up as a red flag from the ATO and is a sure-fire way to get audited.

Thoroughly review your calculations and deductions
Although it can be tedious to check over your reports and tax deductions, it is absolutely crucial if you do not want to be audited. Checking your numbers to make sure everything is accurate before lodging your tax returns is highly recommended. As mentioned, it can be easy to make mistakes- especially when you are not checking properly. So be sure to check!

Know what deductions you are entitled to
Often it can be tempting to declare as many deductions as possible to save money where you can. However, it is important that you understand what deductions your small business is entitled to, and what ones you are not. There are hundreds of different deductions that you may not have even heard of. As such, it is important that you understand what your applying for, and only make legitimate deduction claims.

Keep accurate financial records
In order to perform everything correctly, you must first ensure that your reports are accurate. Not only do you want to double check- but also make sure there are no mistakes in the first place, This includes your cash flow, profit/loss statements, and every single accounting record that may be used for your taxes. Having accurate records is the first step to take when managing your finances and is crucial for your success- not only to avoid being audited, but also to improve your forecasting.

Hire a small business accountant
The easiest way to manage all the previous tips is to hire a small business accountant. A small business accountant will ensure that all your records are done in an efficient and effective manner. By hiring our accountants at M.A.S Partners, you will be able to rest easy, knowing that your records are accurate. This will decrease your chances of being audited in the future. For more information on our small business accounting services, click here.