Talking Cents

Five key tips from your small business accountant in Surry Hills

Many of my past blogs have discussed the issue of cash flow for small businesses. Anyone who actually operates a small business will relate to just how critical this matter is. Having enough working capital to cover day to day expenses is critical to a businesses longevity and success.

As a small business accountants and being an ipa accountant I can tell you one key area where many small businesses fail is when it comes to GST and PAYG withholding obligations to be met on their quarterly BAS statements. As all of your income has GST and this money goes directly into your bank account, these funds end up being absorbed into your working capital and being used for other purposes. So then when it comes time to pay the BAS, the money has already been spent. Playing catch up with the ATO is never easy and often one bad quarter is all it takes to sink a small business.

Working as business accountants in Sydney we can share with you five key tips that can assist you to keep on top of your ATO bills and maintain a healthy cash flow.

1. Set up a separate bank account and make regular (at least weekly) transfers of GST collected and only use this account to pay your BAS liabilities.

2. Only report your GST on a cash basis. That way you aren't sending off GST on money you are yet to collect.

3. Set a regular routine to keep on top of your debtors. This alleviates the pressure to tap into GST collected as a source of working capital.

4. If you know cash is tight and an ATO payment is not going to be met, take action early. Communicate with your accountant and the ATO to create a manageable plan.

5. Use accounting software such as Xero, that allows you to track key aspects of your finances in real time. Integrated with automated debtor systems this can greatly enhance the flow of cash into your businesses coffers.