A tax panic can set in for any number of reasons. Generally though, it’s when business owners and individuals have left their tax too late or have run into a substantial problem that won’t be easy to solve. Pulling out of a tax panic is manageable and doable, but it does tend to go through these 5 stages.
1. Believing It’s Not That Bad
This is the first stage that clients always come to us with. How can you possibly have left it this late to get to your tax? That doesn’t make sense. You’re always organised. The deadline can’t be coming up that fast. And anyway, what’s the worst that could happen? The ATO won’t be that hard to deal with. It’ll all turn out right in the end.
This stage is the easiest to manage. Because there are enough real facts out there about taxation and what it means for you and your business that most people quickly realise how important it is to get their tax affairs under control. We’ve found the best way to manage tax denial is to look at all the important dates and the penalties that may be incurred. After that, it’s a lot easier to start building a plan to be on top of everything!
2. Getting Angry
It’s understandable to get mad when the deadlines are looming, your documents aren’t in order, you can’t find your records and you don’t know if you’ll be able to have your taxes in order! The problem is, most of the time the person you have to be angry at is yourself or your accountant – being angry with the ATO won’t help at all.
If you haven’t been open with your accountant and you haven’t provided them with the documents and information they need, your tax panic is probably not their fault. But if they haven’t communicated with you, or they’ve made crucial errors, it could be time to start looking for a new accountant. You can manage this stage by taking a step back and analysing who is really at fault!
3. Looking For A Quick Way Out
This is always the next step. Clients usually like to think that there is a way to bargain their way out of a tax panic, and while that would be nice – it’s not the case. Normally the only way to get out of a tax issue is to take it seriously, work through the problems and try to get compliant as quickly and as efficiently as possible.
Working with an experienced team of accountants and tax experts is your best way through this. You can’t bargain, but you can find out exactly what you need to trouble shoot in order to finalise your taxes and get out of any existing or possible issues.
4. Wanting To Give Up
This is the hardest stage. It’s when it seems a good deal easier to give up rather than to solve your tax issues. The reality is that giving up won’t help you out of the situation; all you can do is try to find the best possible outcome. It’s not going to be easy, but resolving tax issues does require being proactive and doing everything in your power to resolve issues rather than ignoring them or avoiding them.
5. Learning And Accepting!
Whatever the outcome, there’s one crucial thing that you have to do. Accept that there were issues and then learn from them! You can take the steps to make sure that you only have to deal with an issue the one time, by taking precautions and ensuring that all requirements are met and taken care of. When you can start to build a relationship with an accountant that you know will be able to maintain a high level of communication and professional service, you can ensure that a tax panic won’t set you back next year!
Charltons are one of Sydney's leading accountants, offering expertise in a range of different areas. We've helped thousands of businesses grow and become long term successes, and we have a vast amount of knowledge around business success. If you're interested in developing a growth plan, understanding how technology can help you grow and developing a bright future, we are waiting to hear from you!