One of the most important aspects of running a business is reducing risk. This can be tackled in a multitude of ways but when it comes to tax compliance, there are simple steps you can take.
For starters, any big businesses relying on Microsoft Excel spreadsheets to prepare your tax obligations either on a quarterly or yearly basis, is taking an enormous risk that a software program designed for basic accounting, will be able to ensure your organisation is tax compliant.
Furthermore, by relying solely on a software tool created more than 30 years ago, where an individual can manipulate data and functionality is limited, may mean that you are behind the eight ball from day one.
Nicholas Schrape, Hartley’s senior financial accountant , explains spreadsheets have many limitations when it comes to servicing tax compliance needs.
“For starters there is generally limited multi-user access, which creates problems, as well as differing skill sets amongst Excel users combined with inconsistent policies about formatting.
“All it takes is one person to input an incorrect number and it could throw everything out meaning you are submitting the wrong financial data.
“Furthermore, any incorrect formula input is generally caused by a lack of oversight, which is one of the main problems on trusting Excel as your main software tool for tax compliance.”
Australia has pretty stringent tax compliance obligations and these are only likely to increase in the near future. The insights provided by The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have revealed some inconsistent procedures and policies in the above-mentioned industries and already the Commonwealth Government has spoken about addressing some of these issues.
Multinational companies with offices in multiple locations are also required to be very stringent with their reporting and tax obligations.
The impact of this is that data needs to be shared easily between internal departments with the next step being does it marry up with what the financial department need and have been estimating.
“Without appropriate training on Excel, it is difficult to marry up spreadsheets,” Schrape says. “And if you lock down spreadsheets, it results in you giving up a lot of functionality and flexibility.
“If companies want to continue to use Excel for reporting, they need to have a standard format, which makes it easier to train staff, develop set procedures and provide timely updates that can be immediately accessed by all.
“But the reality is if you are solely utilising on Excel it is costing you time and oversight costs and therefore you have to ask yourself if that outweighs the expense of licensing software.”
It is becoming increasingly common for big business to adopt up-to-date and relevant tax software to ensure tax compliance and accessibility to all necessary parties within the organisation.
The reality is that software will enhance your internal and external processes when it comes to budget forecasting, flexibility with your reporting and stability with internal controls.
The right software should enable your company to insert consistent control mechanisms, standardise processes and compliance for tax reporting, as well as guarantee accurate financial reporting.
Software also allows you to check data history, which won’t be manipulated by one person, and depending on your business, should be able to automatically update sales of products and/or services immediately, thereby allowing you to instantaneously check actual sales against forecasts.
Moreover, the right software package will even have the ability to allow you to incorporate any forthcoming or immediate taxation changes implemented by the Federal or State Government, which will confirm your reporting is accurate and conforming to new regulatory requirements.
Comprehensive tax technology helps you standardise a compliance process that is repeatable and auditable across an organisation. This will allow confidence within a company to freely check internal departments and alerts can be set if any financial parameters seem to be too extreme for the business.
It also reduces the risk of errors by allowing multiple users to update and input data where cross-checking can occur on a daily basis. The software too should automatically input data where possible from sales for example, thereby reducing human error.
Having tax technology software in your business means data flows seamlessly across the relevant tax cycles meaning statutory reporting becomes simpler, while necessary Australian Taxation Office forms can be automatically filled out, saving time and money.
Even country-to-country reports can be comprised automatically saving valuable hours in reporting season.
Data security is also increased, so if a key person leaves an organisation, they are not taking information with them, it is all in the system. Large companies require sophisticated data security for both internal and external purposes and implementing a system that is transferable and permissible across the business means you can foster adoption without disruption.
Data analytics is also much easier to establish on the appropriate software than with Excel. Immediate financial calculations such as stock on demand, sales turnover, price points and more can be made therefore allowing the business to make factual informed decisions that can impact the bottom line that very same day.
Freeing up employees time to concentrate on other tasks that may result in greater profitability or new products or services to be launched, will only benefit the organisation in the long term.
Tax compliance is a necessary component on any business in Australia and beyond. Relying on a software tool created more than 30 years ago puts your organisation at the risk of potential big fines and penalties if your reporting is not accurate.
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