New bankruptcy laws for small business

To many, the legal record keeping requirements can be extremely burdensome. But it doesn’t have to be that way. With a carefully planned strategy and effective communication with your tax accountant, you can ease the pain of having to keep detailed records of your business accounts. If you’re struggling to breathe under the immense weight of receipts, invoices, pay slips and superannuation documents, let us lend a helping hand.

Where do I start?

Your business accounting systems will need to support the type and size of business you have. If you are a sole trader, simple systems might suffice, however as you grow or if you’ve got a larger business you’ll need to have more advanced systems.

Contact ATB Chartered Accountants who can help you find the right cloud-based accounting software for your tax filing and records management needs.

Simple tax affairs

In most cases, you need to maintain legible records of all documents relating to the operation of your business from the last five years. However, the necessary duration may vary given your circumstances. In fact, if you’re filing an individual tax return you may fall into the category of simple tax affairs. And as a result, some records you may only need to maintain for two years.

Legal Record Keeping Requirements for Business Owners

Do I qualify for simple tax affairs?

To qualify as a simple tax lodger, your income must only consist of a salary or wage, interest paid by a bank or government institution, or dividends from a company listed on the ASX. You must also be only claiming deductions on some specific items.

To find out if you qualify for the simple tax affairs system, contact one of our tax professionals for a consultation.

Legal Record Keeping Requirements for Business Owners

What records should I keep?

As a rule, if you’re unsure as to whether you need to keep a particular record, keep it anyway. When it comes to the ATO, it is always better to be safe than sorry.

The key types of document that you must maintain records of include any and all payments you’ve received, expenses that you’ve occurred that are relevant to the operation of the business and paperwork related any transfer, purchase or sale of assets. The lesser known record types include any donations you’ve made and all medical expenses incurred by any family members listed on your Australian tax forms.

Legal Record Keeping Requirements for Business Owners

Keep them safe…

We would recommend having cloud-based accounting systems that have regular automated backups. However, if you have local backups or paper records, we highly recommend that you keep your records in a fire-safe box and undertake the necessary precautions to ensure that you have them copied or backed up.

In the case that a record has been destroyed, being able to prove that you took every possible precaution to maintain the record will be extremely useful in making your case with the ATO.

Legal Record Keeping Requirements for Business Owners

Cash or Cheque?

For those businesses operating predominantly in the cash economy, you need to be extremely careful. While it isn’t advertised, cash dominant businesses are often more heavily scrutinized by the ATO, as it is easier to engage in deliberate non-compliance.

Although it may be tempting, you must report all cash transactions and wages paid in cash. Often business will deliberately hide income to avoid paying superannuation and tax. To fight this unfair advantage, the ATO can apply harsh penalties to businesses caught operating ‘off-the-books’. Such a fine could cripple your business for years to come. Trust us, you don’t want to risk it.

In most cases, the ATO will not immediately punish a business that is deemed to have the right intentions. If you’re unsure whether you’re recording your cash transactions legally, it is critical that you get in touch with a tax professional as soon as possible. And if you are found to be deliberately breaking the law, you may be fined on the spot.

Experienced Tax Professionals

Tax is complex – let us do it for you, so you can be sure in the knowledge that your financial records comply with tax legislation. Contact ATB Chartered Accountants now.

It is expected that the Notifiable Data Breaches (NDB) scheme will come into effect from 23 February 2018, which means that businesses will need to comply with new data breach notification obligations.

Breaches in cyber security can cause long term damage to your business, not only to data, systems and hardware but also to your business reputation. ATB Director, Michael Mekhitarian says “it’s worthwhile to invest in good cyber security processes and systems”.

What does the new Notifiable Data Breach scheme mean?

The NDB scheme has been set up to regulate notification of data breaches in Australia. It requires specific actions to be taken when a data breach is likely to result in serious harm to any individuals whose personal information is involved in the breach.

Organisations that have had their data breached will need to notify their customers as well as the Office of the Australian Information Commissioner (OAIC), as soon as they are aware of the breach.

“It would be very uncomfortable to tell your clients that your data has been breached, that other people have got their information – so this is a big deal.”

Internet security

Why have this legislation?

Due to the growth of the digital age and the large amounts of personal information being collected and stored online, the legislation aims to proactively protect the data of individuals.

It also aims to provide steps to protect individuals whose information has been compromised.

Who does the law apply to?

The new law applies to all government agencies and organisations governed by the Privacy Act. (e.g. Many private sector businesses and not-for-profit organisations with an annual turnover of more than $3 million.)

Michael advises “The government is now mandating that a business with a $3 million turnover, is required to notify all of their clients, if they have security breach.”

The Privacy Act also extends to some types of businesses with an annual turnover of less than $3 million, so it’s best to check with your tax professional if you’re affected.

Cyber security attack

What is a data breach?

A data breach is where there has been unauthorised access to or disclosure of, personal information, usually with the intent to cause harm.

There are numerous threats to your business, including encryption, phishing, identity fraud, backdoor attacks and credit card fraud. Michael discusses some of these threats in his article “Cyber Security and Your Business Systems”.

Which data breaches require notification?

The scheme only applies to ‘eligible data breaches’. These are data breaches that are likely to result in serious harm to any individual affected.

Organisations must conduct their own assessment of the suspected data breach and determine if it is likely to meet the criteria of an ‘eligible data breach’ and as a result require notification.

What happens in the event of an “eligible data breach”?

If an organisation believes an ‘eligible data breach’ has occurred, they must notify all their clients as a matter of priority.

Organisations must advise:-

  •   the identity and contact details of the organisation
  •   a description of the data breach
  •   the kinds of information concerned
  •   any recommendations about the steps individuals should take in response to the data breach

The organisation will also need to notify the Australian Information Commissioner of the suspected breach, using their Notifiable Data Breach statement — Form.

What penalties apply?

The good news is that the aim of this legislation is to protect businesses who are proactive in their efforts to deal with data breaches.

However, some penalties do apply, such as public apologies and large compensation payouts. There is also the risk to the reputation of the business and the associated cost.

Cyber Security

Are your accounting systems secure?

Organisations should act now to ensure their cyber security systems are in place, in order reduce the risk of data breaches and protect the personal information of their customers.

Michael gives you some tips on how to effectively minimise your risk in his article: “Cyber Security and Your Business Systems”.

Review your systems…now!

If you’re not sure your accounting systems are up to scratch, contact ATB Chartered Accountants, we can review your systems and make the best software recommendations to meet your needs.