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  • #991207
    Anonymous
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    If a business paid it’s employees cash in hand for a short period of time, then lost the information that showed how much they were paid, how would an accountant deal with that?
    The only information would be atm withdrawals on a bank statement.

    #1180452
    bb1
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    Rachael , post: 210433 wrote:
    If a business paid it’s employees cash in hand for a short period of time, then lost the information that showed how much they were paid, how would an accountant deal with that?
    The only information would be atm withdrawals on a bank statement.

    A responsible accountant would handle it by saying sort it out yourself you have done the wrong thing. At the same time I would hope the same responsible accountant would report you to the tax office as you are not only ripping of your employee, but also the law abiding tax payers of Australia..

    Or unless I have misread your question, there would be payslip summaries which of course you would have given your employee’s, which would help sort it out.

    #1180453
    Greg_M
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    Rachael , post: 210433 wrote:
    If a business paid it’s employees cash in hand for a short period of time, then lost the information that showed how much they were paid, how would an accountant deal with that?
    The only information would be atm withdrawals on a bank statement.

    I’m assuming from the post you’re looking to rectify a situation you have.

    Best bet would be to actually ask an accountant and get it sorted quickly, my experience has been that you’re better to “own up” and settle it, than wait to be audited and get crunched.

    I would guess the payments would be at regular intervals for similar amounts of money and could perhaps be “reverse engineered” from the “nett” payments by an accountant to ascertain any liabilities or expense claims.

    #1180454
    Anonymous
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    bb1, post: 210434 wrote:
    A responsible accountant would handle it by saying sort it out yourself you have done the wrong thing. At the same time I would hope the same responsible accountant would report you to the tax office as you are not only ripping of your employee, but also the law abiding tax payers of Australia..

    Or unless I have misread your question, there would be payslip summaries which of course you would have given your employee’s, which would help sort it out.

    Tax was withheld from pays, no ones getting ripped off.

    #1180455
    Anonymous
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    estim8, post: 210441 wrote:
    I’m assuming from the post you’re looking to rectify a situation you have.

    Best bet would be to actually ask an accountant and get it sorted quickly, my experience has been that you’re better to “own up” and settle it, than wait to be audited and get crunched.

    I would guess the payments would be at regular intervals for similar amounts of money and could perhaps be “reverse engineered” from the “nett” payments by an accountant to ascertain any liabilities or expense claims.

    Yes, going to an accountant next week, I just think they’re going to tell us make an estimate based off the info and figures available, so I want to put that together before seeing them.

    Would it be better to over-estimate? I know that means the business would have to pay more. This is all cheked/matched at tax time with group certificates/PAYG statements/personal income correct?

    #1180456
    LucasArthur
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    Hi Rachael,

    Personally i find this question quite perplexing, not about the cash side of things but more about the record keeping and other obligatory processing requirements.

    Surely, if they were a said employee with set hours or hours worked etc that a record would have been kept of both the hours worked + the taxes paid + superannuation and the likes? Whether it be on the computer, in a diary or other methods?

    And if a contractor or subbie or so, they surely would have issued an invoice? to back track?

    Understanding this is not answering your question, my comments are more about how you move forward to ensure documentation does not go ‘missing’ in the future.

    Would love for an accountant to jump on as i see this as looking for an expense to right of inappropriately spent funds rather than wages? As if you do not have records or files kept to know what the money was for other than ATM receipts, it could be for the pokies as far as the tax office is concerned… Sorry for sounding harsh, and please i am not saying anything untoward is occurring just trying to say it could be for ANYTHING if it is merely an ATM withdrawal.

    Which leads me onto, why do you pay them cash? Paying them cash can lead you into all sorts of problems such as the predicament you are currently in.

    In this case, i would have whatever limited paperwork you have handy when you go to your accountant as he/she will know the recourse of the actions and what needs to be done to rectify it.. Although as mentioned already, i would be reviewing your own personal processes of record keeping moving forward and learn from this error.

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1180457
    LucasArthur
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    Hi Rachael

    Forgot to say, that some of the responses you are getting may be because you have titled the thread ‘Cash in hand’ work which is traditionally considered to be under the table without the Government knowing. Thus untoward.

    Just bear that in mind whilst you are reading some replies.

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1180458
    bb1
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    Rachael , post: 210447 wrote:
    Tax was withheld from pays, no ones getting ripped off.

    Rachael,

    Its just that you used the standard terminolgy “cash in hand” the same as the tax office uses for ilicit payments. Whereas you are really saying you made standard wages payment but via cash instead of bank deposits/cheques.

    That been the case, you should be able to ask your employees for the pay slips for those periods, check the amount of tax you withheld and remitted to the tax office over that period, check the superannuation amounts you contributed. that should all give you a reasonably accurate picture of what was paid.

    #1180459
    MyGreatIdea
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    Rachael,

    I can understand how this can happen and I guess it’s a good learning curve for future procedures :)

    Are the withdrawals from your account as a lump sum covering more than one employee? Or were they taken out separately?

    And secondly, how many employees and did they have fairly regular nett wages?

    I may have some suggestions for you, depending on the answers.

    Wendy :)

    #1180460
    Anonymous
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    Just to clarify some things:
    This isn’t my business, it’s my partners, I just send invoices and source clients
    Cash was only paid for 2 weeks (why, I don’t know) it was as the business was starting.
    The only records of employee hours were kept in a diary, it was lost on a job site, I now make digital copies after every job.
    Withdrawals were lump sums, useless.
    Could have been 2-5 employees at any time, hours per day could have been anywhere between 2 hour job to 9 hour job.

    I read an interesting page on the ato site about penalties for not keeping records, and it seemed to emphasize that the ato will assist or guide you before applying penalties fines. This is a very casual, small business at the moment, not even needed to register for gst.

    So back to the problem solving…
    Looking back at invoices from those 2 weeks, I’m 100% sure based off the work amount that was done that the employees didn’t work 20 hours per week. Even now they’re only averaging about 30 hours or less a week.
    So if I’m 100% sure they didn’t work more than 20 hours in those 2 weeks, as a last resort, would it be safest to tell the ato they worked 20 hours, and pay the tax withholding for those 20 hours, per employee (a loss for the business, and a lesson learned) if my partner can figure out exactly who worked those 2 weeks.
    The business is still fresh, no tax from pays has been given to the ato yet or activity/PAYG statements.

    Summary: If he pays tax from wages from hours that are guaranteed to be more that was worked by the employees, and uses the same information for PAYG statements, will this keep the ato happy?

    Note: My partners employees are his mates, hence the relaxed attitude towards pays. I hope when he sees an accountant they emphasize the importance of professionalism, because he sure didn’t listen to me about it.

    Thank you everyone for your time and assistance

    #1180461
    MyGreatIdea
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    Lol, as I said, I understand how it can happen…I have three tradie sons. I do their books :rolleyes:

    In your case, I’d call the ATO. They’re really helpful and there won’t be any penalties. They’ll advise you the right way to approach it. They’d rather see people doing things correctly and I’ve always found them extremely helpful in cases like this.

    Good luck, and I’d be interested to know what they suggest.

    Wendy :)

    #1180462
    Greg_M
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    I think I slightly misread from your initial post what you were trying to do, Wendy’s advice is on the money IMO.

    As an ex subbie I can tell you your partners approach is a common one, the construction industry thrives on this “flexibility”, not saying it’s the correct one, but I would be lying if I said I’d never done it … I never lost the diary though :)

    He’s lucky to have someone to sort it out for him, many don’t and just get deeper in the mire.

    Good luck with sorting it.

    Cheers

    #1180463
    ThexArm
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    Its almost like a new business… ATO will definitely help you out.

    Loosing a diary is a genuine thing and you are talking about only 2 weeks.

    On the side note, if the employees were mates of your partner, couldn’t he ask his mates the number of hours they worked in those weeks? At the end of the day these are the employees whose withholding tax you would be sending to ATO!

    #1180464
    bb1
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    ThexArm, post: 210484 wrote:
    Its almost like a new business… ATO will definitely help you out.

    Loosing a diary is a genuine thing and you are talking about only 2 weeks.

    On the side note, if the employees were mates of your partner, couldn’t he ask his mates the number of hours they worked in those weeks? At the end of the day these are the employees whose withholding tax you would be sending to ATO!

    Sure loosing a diary is possible, but it also highlights a raft of other issue, such as following all requirements, not just “keep the ato happy”. It goes beyond that.

    First thing i can see, sure report higher amounts to the ATO, BUT how will this impact your workers, the simple answer is you are paying higher withholding, and it is a cost to you. But no, there are further potential impacts. The higher amount you report, will appear as a higher amount on the workers end of year statement. This amount no matter how small or how much higher, may just push that worker into the next tax bracket, or knock them out of eligibilty of some benefit or allowance. Sure it covers you but what about the worker, you need to look at all impacts of this “casual business” decision.

    Second what about all the requirements of employment which have not been followe, ie. Payslips are meant to be issued and provided to the worker within 1 business day of the wages been paid, this has obviously not been done.

    Thirdly – Well who knows what other requirements of employment have been breached, has work cover super, accounting of correct holidays,

    Ok you get the idea, this is not just a case of loosing a diary . As employers, or potential employers we all have certain obligations under the law. And that applies if we are a fresh business or a stale one.

    There is no such thing as a “casual business”, in particular when you start employing staff, there are major obligations, not just to protect yourself but to protect your staff. Has this casual business looked at the other requirements such as insurance…

    Sorry for the rant but there is responsibility with running a business, and if following these had occurred the loss of a diary would be just a pimple, just sitting here typing I can think of heaps of other things that I ask has this “casual business” done this or that. The one thing I note with great interest at least you are sending out invoices to collect money, beyond that well !!!!!

    #1180465
    ThexArm
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    All very valid points Bert.

    All businesses need to ensure they are complied with various laws and statues before commencing.

    We don’t know much about their business and how it has been started. It is the reason why we all suggest business owners to consult an accountant before starting out. For any layman this is all be too confusing and complicated.

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