The possibility of being subject to a Tax Audit is increasing every year. If your business finds itself on the receiving end of an audit, you’re likely to face substantial disruption to your operations and incur significant costs. The entire process of a tax audit can be an incredibly intimidating for SMEs, which is why most business owners panic at the mere thought of it.
However, there are however several things that business owners can do in the coming financial year to save time, money and stress in the event that they are audited.
First off, it’s important to be organised. Ensure your business documents are filed appropriately, so that you have easy access to all of your financial records exactly when you need them. It helps to have a system for employees to follow and a specific place for filing receipts and important documents, as well as any passwords for accessing online documents that you may have.
A potential consideration is to use a cloud-based accounting software program. There are several solutions available that allow you to take a picture of an expense and upload it automatically, which not only saves physical storage, but also the hassle of searching through paperwork and receipts that you need for tax purposes.
Hire a Professional
Small business accounting can quickly become complex if you try to do it on your own, so a good accountant or bookkeeper is often a smart investment. An accountant will typically save your business far more than they cost, and they will be able to carry out a range of tax related tasks. Some of the things an accountant or bookkeeper may be able to do for your business include:
- Keeping you up to date with the latest tax laws
- Preparing annual statements of accounts
- Keeping your company’s status updated in the government’s company register
- Maintaining records of directors and other administrative personnel
- Dealing with payroll and ensuring that all employees’ tax codes and payments are recorded correctly
Having a record of all of the above will come in handy in the event of a tax audit.
Take Out Tax Audit Insurance
Research conducted by First Class Accounts showed that 48% of business owners had no idea that Tax Audit Insurance existed. However in the event of a Tax Audit, an appropriate policy could save your business thousands of dollars.
In the event that your business finds itself subject to a Tax Audit, costs can accumulate quickly. Having to engage the services of professionals such as accountants, bookkeepers and lawyers can be expensive; Tax Audit Insurance is relatively inexpensive in comparison and will cover the professional fees that arise from an audit.
We can give you more information on Tax Audit Insurance and whether it may be an appropriate option for your business.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.