Is your cafe about to get Audited?

“My accountant is looking after it, no worries, I won’t get audited”. We hear this time and again, though unfortunately it is naïve to think this. The ATO can at any time ask for more information about your business. Your Accountant will be asking you for some really specific docs that can consume your time or worse still cost you a lot of money!

Talking to many café owners in the industry, just the mention of the ATO sends shivers down their spines. The power, the ability and the precedents of the Tax Office mean that every café owner needs to understand what they are reporting and have evidence to back up variances.

So how does it work? Well, the ATO compares your BAS lodgings and tax returns to that of your industry and if there are differences, it will start asking questions. To mitigate the risk of expensive accounting fees, loss of time or even an ATO fine, work on 3 things:

1.  Keep good records of your transactions:                                                                                                                                     Till receipts – Your POS system or cash register can give you this                                                                                          Keep receipts on claimed expenses for 5 years
2. Use a reputable accountant:                                                                                                                                                       Bad accountants can often attract the attention of the ATO
3. Self-check your benchmarks                                                                                                                                                     Prior to lodgement of the BAS, ask your accountant to send you the draft, then cross-check the ratios in the below table

Key benchmark ratio	Annual turnover range
	$65,000 – $250,000	$250,000 – $600,000	More than $600,000
Income tax return
Cost of sales/turnover	36% – 43%	35% – 41%	33% – 38%
Average cost of sales	39%	38%	35%
Total expenses/turnover	79% – 88%	84% – 91%	87% – 93%
Average total expenses	83%	88%	90%
Activity statement
Non-capital purchases/ total sales	56% – 71%	53% – 66%	50% – 59%

 

Please seek help from you accountant as the above is a general guide only and does not constitute personal, tailored advice. Black Market Roasters are coffee bean suppliers based in Sydney, who supply Sydney cafes with freshly roasted coffee. If you are interested in wholesale coffee beans head over to our Wholesale Form and we’ll get back to you!