[vc_row][vc_column][vc_column_text]If you make up part of the 2.1 million small businesses currently operating in Australia, then there are some exciting tools being released by the Australian Taxation Office (ATO). These updates will help you benchmark your business against others in your industry and track your tax information effortlessly from your mobile.
This handy ATO app has become a great tool to collect your essential tax information for your accountant, get a snapshot on how your business compares to others and what you need to do to make it count.
Small Business Benchmark
While you can benchmark your business manually, the ATO app allows you to quickly compare how your business is tracking against your industry average. The Small Business Benchmark uses anonymous information collected from the tax returns and activity statements of over 1.5 million small businesses and accounts for over 100 different industries with varying turnover ranges (up to $15 million). It has two benchmarks that your business could be compared with:
- Performance Benchmarks
This benchmark applies to all industries and takes two sets of data into consideration: your income tax and activity statement data. Comparing information on areas such as the total expenses to turnover, the Performance Benchmarks also use your business’ labour turnover, cost of sales turnover (excluding labour), non-capital purchases to overall sales and GST-free sales to total sales to rank you against others in your industry.
- Input Benchmarks
Unlike the Performance Benchmarks, the Input Benchmarks apply to tradespeople who are doing domestic projects and are purchasing their own materials only. If you’re running a trade-based small business, then this benchmark will provide you with an estimate of your turnover based on labour and used materials.
To get started, download the ATO app and input the requested data, including information such as your:
- Gross business income
- Salary and wages
- Cost of sales
Analysing Your Benchmark Results
Once you’ve received your benchmark figure, it’s important to evaluate it. Reporting above or below your businesses’ industry standard, depending on the area that you’re currently analysing, can be a sign that something may need altering. Alternatively, it can also be a sign that your business is succeeding compared to the industry standard in that area and this should be investigated to ensure you can replicate the performance across other areas of your business.
Below are some examples of reporting above and below an industry standard benchmark.[/vc_column_text][vc_single_image image=”3071″ img_size=”full” alignment=”center” onclick=”custom_link” link=”https://outlook.office365.com/owa/calendar/WalkerHillCharteredAccountants@WalkerHillAccountants.onmicrosoft.com/bookings/”][vc_column_text]In this example, reporting above the industry standard benchmark for the Expense Comparison section could be a red flag that it’s time to book in and see your accountant.
In this instance, the high benchmark result could mean that there is an overspend in expenses which could result from an incorrect pricing model, lack of sales, high overheads or discrepancies in your figures.
[/vc_column_text][vc_single_image image=”3072″ img_size=”full” alignment=”center” onclick=”custom_link” link=”https://outlook.office365.com/owa/calendar/WalkerHillCharteredAccountants@WalkerHillAccountants.onmicrosoft.com/bookings/”][vc_column_text]In the reporting below the benchmark results example, being under in the Costs of Goods Sold comparison could flag an issue with the current pricing point or that there has been an issue with the classification of the expenses account.
If you would like any assistance with analysing your small business benchmark results, contact us to organise a meeting.
The myDeductions section of the ATO app is the space where you can easily keep track of your expenses and income records, making it easier for employers, employees and your accountant when it’s time to do your end of year work. Making hunting for receipts and your tax information a thing of the past, this app feature allows you to collect data throughout the year and email or upload this to your accountant. This feature allows you to keep track of your:
- Work records and general expenses
- Vehicle trips
- Receipts (photos) and
- Income and tax deductions (if you’re a Sole Trader).
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