If you're a small business owner and you've received notice of an impending audit by the ATO, it's natural to feel anxious and stressed. 

Often, when this happens to people, they will panic, and this will cause them to make mistakes. If you're a small business owner and you've received notice of an impending audit by the ATO, it's natural to feel anxious and stressed. 

For example, they might rush the paperwork, and end up providing bad information to the ATO, which can cause further penalties.

Equally as often, they'll lock themselves into unmanageable levels of tax debt and fail to negotiate a payment plan that is reasonable for their businesses' circumstances.

Panicking is not the solution. Instead, remain calm, contact the team at Emergency Accounting so we can support you through this process, and methodically prepare for the audit and debt collection process.

Firstly, it's important to understand why the ATO is conducting an audit of your business. 

In most cases, it’s simply a matter that the numbers that you’d supplied via a tax return or business statement doesn't match up with what they think you should have earned and paid in tax. 

An audit is not an accusation. It’s simply an attempt to clarify the information that the ATO has on you and whether they need to undertake debt collection activities.

Alternatively, they may suspect that you have tax debts. Tax debt is a common issue for many small businesses and sole traders, and it's essential that you understand your obligations as a business owner when it comes to paying taxes.

In either case, you want the assistance of Emergency Accounting. 

Firstly, we’ll be able to help you determine if there are any discrepancies or if you will owe money. From there we’ll also help you prepare your response.

If your business is being audited by the ATO and you discover that you do have tax debts, it's important to be upfront and honest with the auditor. Not only will it prevent further penalties, but the ATO will be more inclined to engage in good faith and help you design a payment plan that your business can handle.

The ATO will inevitably discover any outstanding debts that you hide by themselves, and the penalties will be more severe for the deception. Speak to the team at Emergency Accounting to understand how to be forthright with providing the auditor all the information that they need to assess the situation.

One of the key things that we will do to help you prepare for an ATO audit is to ensure that your record keeping is up-to-date and accurate. This includes records of all of your business transactions, including invoices, receipts, and bank statements. 

Having good record keeping practices will not only help you prepare for the audit, but it will also help you avoid future tax debt issues.

You may well be concerned to discover that have debts. This is another reason to have the Emergency Accounting team on your side. We will help you negotiate with the ATO and address the debt recovery in a way that your business can handle.

What to do during the audit?

During the audit itself, it's important to be cooperative and responsive to the auditor's requests. 

Answer all questions truthfully and provide all of the necessary information in a timely manner. If you are unsure of something, ask for clarification. Remember, the auditor is not there to catch you out – they are simply doing their job to ensure that your business is compliant with tax laws. 

If the audit reveals that you do have tax debt, understand that you’re not in trouble and the ATO will only seek to claim back the debt owed (with any applicable penalties). It is important to act quickly to address the issue and negotiate with the ATO, because they will be very open to a solution such as a payment plan.

With the support of Emergency Accounting, you can secure a payment plan that will allow you to address the debt without affecting the cashflow and health of the business. 

There are also many payment options available to you to work with the ATO that are less well known, and EPAS will help you to explore every one of them to find a solution that is right for you.

Why you need emergency accounting support when addressing the ATO?

As emergency accounting professionals, we can help you understand your tax obligations and provide guidance on how to prepare for the audit. 

They can also assist you in negotiating a payment plan if you have tax debt, which will both help you to avoid penalties and, potentially result in the ATO agreeing to reduce some of the debt to a more manageable level.

It's also important to understand your rights during an ATO audit. 

The ATO has the power to request information and documents from you, but they must do so within the confines of the law. For example, they cannot force you to provide information that is not relevant to the audit, or that would incriminate you in a criminal offence. 

While we are not lawyers, and you will need to seek further support should a legal action situation arise, we will help by flagging any areas where the ATO is crossing boundaries.

Don’t let tax debt stress you out

An audit and the potential tax bill at the other side seems scary, but there will always be ways to navigate the challenges. 

With EPAS, we’ll help you chart a course to debt-free business health and ensure that the ATO never needs to audit you again. Contact us right away if you’ve been given a notice of audit.