The ATO has updated its small business benchmarks with the latest data taken from the 2022–23 financial year. These benchmarks encompass 100 industries, enabling small businesses to compare their performance, including turnover and expenses, with others in their industry.
While the ATO doesn’t use the benchmarks in isolation, small businesses that fall outside the ATO’s benchmarks are more likely to be subject to a closer examination by the ATO. The ATO uses information reported in business tax returns, along with key performance benchmarks for the relevant industry, to identify potential tax risks.
Aside from determining the risk of unwanted attention from the ATO, the benchmarks can also be used to compare your business’s performance against that of other businesses in the same industry. The benchmarks can help you identify areas where you may be able to reduce costs or improve efficiency.
The small business benchmarks can be accessed here.
Aside from the small business benchmarks, the ATO also has a business viability assessment tool that helps business owners identify any obvious financial risks. The ATO consider a business to be viable if it is generating sufficient profits to meet commitments to creditors and provide a return to the business owners. If a business isn’t generating profits, the ATO looks at whether the business has sufficient cash reserves to sustain itself.
The business viability assessment tool can be found here.
Please let us know if you would like us to review your business performance and provide recommendations on ways to improve it.
