At Loan Saver Network, we speak to many businesses regarding their tax obligations. As such, we gain a good understanding of where a business has issues with their tax obligations. Indeed, many different taxes require payment. Indeed, it can be easy to make a mistake.
Every financial quarter a business must lodge and pay their BAS. Also, included in your BAS lodgement is:
We find errors could start with the BAS lodgement as some confusion arises between the PAYG for employees calculation and your company PAYG. Additionally, if you don't pay yourself a wage each week or month; your accountant would calculate your income tax return at the end of the financial year. As such, unknowingly, the personal tax debt can quickly mount up over the year.
Tax debt can quickly occur when you have made a mistake with your accounting. Plus, in most cases, two years may have passed before finding the tax mistake. Therefore, two years of tax payment is required.
The ATO can be quite aggressive in collecting on a tax debt. As such, you might view the ATO as a double-edged sword - one sharp edge and one blunt one. Therefore, if you communicate appropriately, they will work with you to resolve the problem. However, if you try to hide and don't respond, then they will seek to close your business.
See related ato hardship and tax debt questions.
There are several simple ways to manage your tax obligations. However, as you put on employees and grow your business, the tax obligations become more challenging to control yourself. Consequently, we recommend employing or contracting a bookkeeper to manage your BAS lodgements. However, if you don't have a bookkeeper and need a simple method in the interim, then try:
If you can't pay your tax on time, we suggest to our clients to contact the ATO. The ATO is quite helpful if you are proactive in managing tax arrears, and you may be able to set up a payment plan.
When your debt is a small amount under $100k, and all lodgements are up to date; you could set up a payment plan over the phone using the ATO automated system.
The ATO has guidelines regarding ATO hardship and approving payment plans. As such, a payment plan is an excellent approach to resolve any tax debt and prevent escalating to legal debt collection.
Payment plans are a great way to solve the tax debt problem. However, you need to ensure you have the cash flow to meet your monthly payments. The ATO is stringent on monthly tax debt payments. Hence, if you default once, they will cancel the payment plan.
The ATO won't approve a payment plan for their tax debt in all cases. Indeed, you may be able to meet their requirements. However, other options available to you include using finance options to repay your tax debt. As such, there are several options:
All these options below are very different finance products. Consequently, each finance solution is suited to a particular purpose. Hence, you can read about in the business loans pages.
Similar to other consolidation loans, these tax debt finance facilities allow you to pay off your ATO debt either by keeping your existing home loan or by refinancing your home loan. To do this, you will need to have some amount of equity in your home loan. Also, we have lenders who allow some late payments and arrears with your existing home loan payments.
Business owners often use tax debt finance to pay unexpected tax debts to avoid a forced liquidation or ato bankruptcy. So if you think you will struggle with upcoming tax debts, save the stress, save money, and contact us for advice today on 1300 796 850.