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Staying in compliance with your tax and financial reporting requirements is one of the most significant legal obligations imposed on all Australian businesses. It is therefore essential to ensure that your business has all of the available information and tools required to fulfill your legal requirements. Read on to find our tips to help your business maintain tax compliance.
1. Prepare for Single Touch Payroll Reporting
Single touch payroll (STP) is one of the most significant recent developments in tax and financial reporting compliance. To maintain compliance with your reporting obligations you need to develop a firm understanding of STP and how it will modify your traditional payroll processes.
The first phase of STP reporting became mandatory July 1, 2018. However, that phase only affected businesses with 20 or more employees. The second phase will see STP reporting become mandatory for all small businesses. This means that companies with with 19 employees or fewer will need to be in compliance with STP reporting. And this becomes effective on July 1, 2019
Single Touch Payroll Changes Payroll Reporting
STP changes the traditional model of payroll reporting. Until now, small businesses could send all employees’ payroll information to the Australian Taxation Office (ATO) at the end of the year. However, STP utilizes payroll software. Further, it sends this information on a pay-by-pay basis.
Payroll and business management software already compile and record vital information including net pay, PAYG withholding, and superannuation contributions for each employee during every pay cycle. Now, however, STP converts this information into the required format. Then it sends it directly to the ATO for their records.
How to Prepare for STP Reporting
In order to prepare for STP reporting, contact your business management software provider and determine whether they are STP-enabled. Many will have the relevant program built into their system. Others will require you to download an update.
If your software is STP-enabled, speak with your provider about how they can support you through the transition to STP reporting. Fortunately, many will offer training and other support services.
2. Invest in Accounting Software
One of the main benefits of accounting software is that it remains up-to-date with all changes to relevant regulatory and legislative provisions. That’s because leading accounting software providers ensure that their customers have all of the tools and platforms required to remain in compliance with their tax and employee entitlement obligations.
3. Keep Complete and Accurate Records
Tax compliance is heavily regulated and required by law. If your business fails to adhere to the requirements, you will be subject to heavy penalties. Therefore, it is essential to maintain complete and accurate financial records.
Fortunately, accounting software enables users to record and store all of their financial records in one central location. Additionally, intuitive features and integration with your other sales and business management software provide the required information to your accounting software. This allows the software to automatically update your financial reports with real-time data.
Take Advantage of the Easy-to-Use Templates
Accounting software also provides users with easy-to-use templates. These ensure that all financial information is recorded as required by legal standards. All of these tools help businesses to remain in compliance with applicable tax laws.
4. Remain Educated
Accounting software takes away much of the tedious work when it comes to maintaining compliance with regulatory requirements. However, it is still important for all business owners to maintain a thorough understanding of their tax obligations.
Fortunately, there are many education providers and resources available to help you understand your tax and financial reporting requirements. Also, there are numerous helpful resources online, including helpful information available from the ATO’s webpage.
What’s more, those who require more support with maintaining tax compliance can reach out to a trusted resource or financial professional for help along the way.
5. Conduct Regular Risk Reviews
The most important step in maintaining tax compliance is ensuring that your business regularly conducts an internal audit and risk review. That’s because conducting a regular risk review is essential. It will help you to determine any gaps in your business’s financial reporting processes. This allows you to spot any areas of improvement and resolve issues before they are subject to the strict scrutiny of the ATO.
Take Steps to Remain in Compliance
Maintaining tax compliance is one of the most important obligations for any business. It is therefore essential to remain educated and to invest in the best products available. This will help ensure that your business is accurate and in compliance with the numerous tax and financial reporting obligations.