2. Falling foul of the ATO
One of the key reasons for the rise in insolvencies in the 2011 financial year was a crackdown by the Australian Tax Office on wayward small businesses.
Whereas sloppy tax dealings and debts were, to an extent, overlooked during the global financial downturn, the ATO has now clearly set its sights on strict enforcement and certain businesses are feeling the pinch.
The ATO has unveiled a new tool that it will use to identify under-reported income, phoenix activity and contractors that register as businesses and fail to pay their tax bills.
The message is clear – do not run an unsustainable debt, be certain of your tax obligations and comply with them. The penalty for not doing so could sink your business.