Audits can happen at any time - here's how you can reduce risk
It's tough running your own small business. The hours are long, stress levels are high, the paperwork is never-ending and managing the finances is complicated. You never have enough time to spend on the activities that generate income and add value to your business. As for personal and family time, well, for most business owners, that's a pipe dream.
Small business owners are required to pay any debts they accrue and meet tax and regulatory obligations. However, compliance is complex and constantly evolving. Increasingly, the Australian Tax Office (ATO) is cracking down on businesses, which isn't surprising considering some of the recent high profile cases of illegal practices, tax evasion, wage errors, and non-compliant activity.
Small businesses are audited to ensure they're fulfilling legal obligations related to staff superannuation, wages and conditions, and GST and BAS reporting. Lodging your BAS late, or failure to lodge, under-reporting GST, large GST activity, and over-claiming input credits can trigger an audit. Managing your financial records is difficult, especially when you're not a trained bookkeeper or accountant, and small errors can become big problems, expose you to risk and cost your business money.
If the ATO audits you and finds discrepancies, whether intentional or not, it could have consequences for your business such as interest, penalties and potential prosecution. Even if you engage a bookkeeper or an accountant, as the business owner, you are ultimately responsible for compliance. GST and BAS, OMG!I
t's safe to say that one of the major pain points for businesses is GST and BAS reporting. A special report found that on average, small businesses spend over 84 hours each year on GST compliance alone (collecting, complying and reporting). This time equates to $6,780 as an internal cost, and that's excluding any accountant and bookkeeper fees. That is precious time away from clients and customers, training, and other business activities that provide income and growth. You could be spending all that time on GST compliance, but do you know that your records are error-free and what you're lodging is accurate?
When doing the books, it's easy to make mistakes, and it's also understandable that you'd fall behind because you have so much else to do. But by doing so, it means you're more likely to have the ATO come knocking. A typo in the transaction amount or a supplier name, coding a transaction to the wrong account, paying and claiming GST when you shouldn't be or not paying GST when you should, impacts your cash flow, puts your business at risk, and means your books and reports are inaccurate.
There are also the risks that you don't know exist, that you may not think to look for or don't have time to investigate. For example, has your supplier recently changed GST status and is no longer eligible to charge it? Does the ABN of a supplier match what's on the Australian Business Register (ABR)? Has your supplier cancelled their business and you're still trading with them?
Oh, hello ATO :(
Can your business, and you as the owner, afford a hefty tax debt or penalty due to simple mistakes, a missed BAS deadline or inaccurate reporting? You can't avoid an audit, but if you are audited, wouldn't it be great to know that you're bookkeeping is more accurate, and you're in less danger of non-compliance? XBert analyses your Xero cloud accounting data multiple times a day to detect errors, anomalies, and patterns that are financial risks to your business. Using sophisticated algorithms, custom machine learning and predictive analytics, XBert will find things that even highly trained eyes may miss. You are alerted in real time and can resolve the issue directly in Xero - before that money is gone for good.
XBert in action
XBert reviews your invoices, bills, expenses, contact records and other entries in Xero and connects with the ABR regularly, so any updates to their database are also updated in XBert. XBert automatically monitors the ABR and GST status of businesses you trade with. You receive an XBert risk alert if there are any discrepancies with a supplier's GST status, a business' registration or ABN and your records, or if you are trading with a cancelled business. Using XBert, you can resolve these risks quickly and easily, and save valuable time and money.
Here are some of the real-time alerts you'll receive when XBert audits your accounting data:
- Bill raised with a supplier not registered for GST – You're about to pay GST to a supplier not registered to charge it.
- Payment to a supplier not registered for GST – You've paid a supplier GST and won't be able to claim this on your BAS. You can request a refund or credit on your account.
- Business has incorrect GST status – Your contact record in Xero has an incorrectly assigned GST status based on the ABR.
- Large GST activity for a contact without an ABN – This contact is in the top 20% of GST activity for your business, but there is no valid ABN recorded.
- Incorrect ABN or business name for a business – This business ABN or business name doesn't match what is on the ABR. You could be trading with an unregistered business, exposing you to much higher risk.
- Expenses, unpaid income, or invoice raised with a cancelled business – You could be trading with an unregistered business, exposing you to much higher risk.
- Different account name for an income or expense transaction – This transaction has been allocated to a different account name than previously used for reconciliation, and this account may have a different GST rate applied.
XBert will help ensure that you're paying and claiming GST correctly, and withhold payment when required for businesses without a valid ABN. Your contact records can be kept updated and have the correct GST rate applied. You'll know when you're trading with an unregistered or cancelled business and can avoid any money loss. Account transactions, coding, and GST rates will be more accurate.
Prepared for audit & peace of mind knowing you're on the right track for compliance
XBert will alert you to risks and issues early, and you can act quickly to resolve them before it costs you money and causes you unnecessary stress. XBert will perform manual checks for you, saving you time that can be go into other aspects of your business and puts you on the front foot when BAS comes around. Up-to-date and more accurate data means more accurate reports and reduced risk of non-compliance. You will safeguard the books and your business, and have the best information available to make decisions and plan for your business' future. GST, ABN and bookkeeping risks and errors are just some of the many XBert will find reviewing your accounting data multiple times a day. Using sophisticated algorithms, predictive analytics, and machine learning, XBert is there to detect business risks, saving you time and money.
XBert is an easy-to-use, powerful Xero add-on for business owners, finance teams, bookkeepers and accountants to stay a step ahead in business. If you're serious about business success, sync your accounting data with XBert. In minutes, you'll know the amount of money at risk and how to prevent losing it.