Audit proofing your business is a sign of good corporate governance. The essentials to the concept of audit proofing your business is your manner of handling record keeping for your business and your knowledge of the laws that affect you on a day-to-day basis.
Make sure your record keeping is outstanding
Using a professional online accounting software solution should be your first order of business. Accounting software allows you to monitor your cash flow and your trading performance. It will also be of great help when you calculate your GST and PAYG payables.
In case you are subjected to a Business Records Audit by the tax office, the first thing they will ask is “How do you handle your income and expenses?” Utilising professionals to maintain your records and file official documents, such as ASIC forms, Tax Returns and Payroll Tax returns, will be of great benefit to you.
It is also recommended that you seek the help of a professional if you don’t know how to keep up with your taxation record keeping requirements, or if you’re not aware of what you can and cannot claim.
Keep a motor vehicle logbook
You may be exposing yourself to the risk of a rejected claim if you’re not aware that you must maintain a logbook for business motor vehicles for a 12-week period every five years. Things would be a lot easier for you if you can keep and record more supporting information relative to your business claims.
Maintain home office records
Do you need proof to support the fact that you are using part of your home as an office and making a claim based on that point? Then, take a picture of that area assigned as your home office. There may come a time when you could outgrow your home office and decide to move it outside the home. You could have converted your old home office for a different function. By then, it would be too late for you to take a picture!
Record travel activities
Record your travel activities by the hour if you are travelling for business for five nights or more. This way you’d know the percentage of your travel expenses allocated to your business activities.
Also take note that international business activities should be substantial. For example, if you’re in an arts-related job, going to galleries and museums and claiming that it is part of your job is not acceptable. Most people visit those places when they are on overseas holiday. To back your claim for airline tickets, meals and accommodations, you have to go to a work-related conference or attend several business meetings and negotiations.
Lastly, consider the corporate structure of your business. Would it be advantageous now to change to a corporate structure for limited liability protection? Keep in mind that the systems you implement from the very start will safeguard you and your business in the long term.
See a qualified tax advisor, accountant or bookkeeper to help guide you in making a tax change for the better. PJS Accountants can help you organise your tax, accounting and bookkeeping affairs. We work with large companies, SMEs, family businesses and individuals. For enquiries, contact PJS Accountants.