# 5 Common Tax Mistakes Small Businesses Make in Australia Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-29 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Avoid These 5 Common Tax Mistakes: Tips for Australian Meta Description: Don't risk hefty penalties or underpaying staff. Get help from Pherrus Financial to stay compliant and keep your tax under control. URL: https://financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australiahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1253877203-1736815339930-compressed.jpg) **Sponsored Feature Presented by Pherrus Financial** Owning a business comes with challenges, but it’s even more complicated when it comes to tax time. There are many tasks to manage, and the last thing you want is to sit and look through books and records for hours. However, [keeping your tax under control](https://www.financedigest.com/dollar-buoyant-as-robust-u-s-data-keep-fed-hawks-in-control.html "Dollar buoyant as robust U.S. data keep Fed hawks in control") is crucial if you want to avoid hefty penalties or tax debts and ensure you aren’t paying too much tax. Here are five common mistakes [small business](https://www.financedigest.com/small-businesses-and-scams-what-you-need-to-know.html "Small businesses and scams: What you need to know") owners make in Australia at tax time. - ## **Not using a tax agent or accountant** Some [small business owners believe they can run](https://www.financedigest.com/small-businesses-run-out-of-cash-before-they-run-out-of-potential.html "Small businesses run out of cash before they run out of potential") their business, manage workers and attend to customers all at once. However, no matter your management and [bookkeeping](https://www.thebalancesmb.com/bookkeeping-101-a-beginning-tutorial-392961) skills, it isn’t always easy to handle all these and run a successful business. This is why you need a tax agent or [accountant to help you do better and prevent you from making unnecessary mistakes](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation"). You can seek help from a [Pherrus Financial](https://www.pherrus.com.au/) accountant to avoid any regrettable scenarios. - ## **Failing to get the right employees’ status** Failing to get the engagement status of employees right as a [business owner can land you in legal](https://www.financedigest.com/how-to-budget-for-legal-fees-in-your-business.html "How to Budget for Legal Fees in Your Business") complications. Committing this mistake can cause you to overpay or even underpay your employees, which may get you in trouble, not only with [taxes but also with fair work](https://www.financedigest.com/eu-us-working-on-deal-to-make-ev-minerals-eligible-for-tax-credits-eu-official.html "EU, US working on deal to make EV minerals eligible for tax credits -EU official"). To avoid this, ensure that you have the correct worker status and always double-check them. - ## **Not keeping track of changes to tax laws** Australia’s tax laws are continuously changing, and with so many things on your to-do list, it isn’t easy to [keep track](https://www.financedigest.com/will-mays-new-minister-percy-keep-the-northern-powerhouse-on-track-post-brexit.html "WILL MAY’S NEW MINISTER PERCY KEEP THE NORTHERN POWERHOUSE ON TRACK POST BREXIT?"). Some changes can work in your favor, but others could cause a rude awakening if they are overlooked. As an employee, you don’t have to worry about most of these things since someone else is taking care of them on your behalf. However, if you are a [business owner](https://www.financedigest.com/5-reasons-why-you-need-to-step-into-your-ceo-role-as-a-small-business-owner.html "5 Reasons why you need to step into your CEO role as a small business owner"), your employees trust you to do your due diligence. For instance, you are required to update [awards twice a year](https://www.financedigest.com/praxity-named-association-of-year-at-iab-awards.html "Praxity named Association of Year at IAB Awards"). If you overlook these changes, you might end up underpaying your employees and may not withhold enough [money for tax time](https://www.financedigest.com/how-to-use-algorithms-to-save-time-and-make-money-when-trading-currency-crypto-shares-etc.html "How to use algorithms to save time and make money when trading (currency, crypto, shares etc)"). This can cost you thousands of dollars at the end of the financial year, or you will lose your [employees’ trust](https://hbr.org/2014/06/proven-ways-to-earn-your-employees-trust). - ## **Failing to keep good records** Good record-keeping [means business](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?"), and there is no way around it. It’s essential to keep hold of all your business-related receipts so your [tax agent can accurately assist you with your deductions](https://www.financedigest.com/common-tax-deductions-and-credits.html "Common Tax Deductions and Credits"). In addition, it’s a necessity to be audited by the [Australian Taxation Office](https://www.ato.gov.au/) (ATO). Accurate and detailed [business records allow for better financial](https://www.financedigest.com/financial-advice-for-starting-your-own-business.html "Financial advice for starting your own business") reporting, so you should keep records of everything, both outgoing and incoming. - ## **Having incomplete or missing tax invoices** Every [business purchase of more than $82.50 must have a tax](https://www.financedigest.com/are-there-tax-breaks-for-business-health-insurance.html "Are there tax breaks for business health insurance?") invoice, and they should be kept for at least five years. Having incomplete or no tax invoices can cause you to claim items you don’t have a record of. ## **Endnote** Tax mistakes can be destructive to [small businesses](https://www.financedigest.com/4-ways-small-businesses-can-save-money-while-outsourcing.html), but the good news is that they are avoidable. [Avoiding these five common tax mistakes](https://www.financedigest.com/how-banks-can-avoid-regulatory-reporting-mistakes-with-a-good-dose-of-automation.html "HOW BANKS CAN AVOID REGULATORY REPORTING MISTAKES WITH A GOOD DOSE OF AUTOMATION") is crucial, but you should also consider investing in a professional tax accountant to help you with your taxes. With a dedicated expert to evaluate your taxes, you will have less to worry about and can [focus more on your business growth](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---