Importance of engaging a local bookkeeper in Australia for your international business

Expanding an international business into Australia presents significant opportunities, but it also comes with complex financial and regulatory obligations. We have encountered many non-resident businesses who unknowingly make bookkeeping mistakes that lead to compliance risks, financial penalties and operational inefficiencies. As experts in the Australian accounting industry, we highly recommend for you to engage a local or Australian bookkeeper to ensure that your international business remains compliant and operates smoothly within the Australian financial landscape.

By Ro Elvinia

Common mistakes of non-residents doing business in Australia in terms of bookkeeping

Australian tax laws, compliance standards and reporting requirements differ significantly from those in other countries. Several international businesses that initially engaged non-resident bookkeepers have reached out to ABN Australia after underestimating the complexity of the local regulatory framework. Without the right expertise, these businesses inadvertently made errors that led to penalties, tax audits and operational disruptions. Based on our experience in dealing with international clients, we have outlined the most common bookkeeping mistakes that non-resident businesses make in Australia.

Incorrect Goods and Services Tax (GST) registration and reporting
Many international businesses either fail to register for GST when required or incorrectly apply GST to their invoices. Businesses with an annual turnover of $75,000 or more are required to register for GST, yet some businesses overlook this obligation, resulting in non-compliance. Additionally, businesses must choose between the cash and non-cash (accrual) method of accounting for GST, which depends on their aggregated turnover. Large international businesses are generally required to use the non-cash method, and incorrect selection can lead to reporting errors and tax complications. Overpayment or underpayment of GST can also result in penalties from the Australian Taxation Office (ATO), causing financial strain.

To illustrate, we assisted a client who initially failed to register for GST, believing that their overseas entity’s turnover was sufficient for exemption. As a result, they were penalised for late registration and had to retrospectively adjust their financial records, creating additional administrative burdens.

Payroll and superannuation errors
Australia has stringent payroll compliance requirements, including adherence to the Fair Work Act and mandatory superannuation contributions. Incorrect wage payments, failure to meet superannuation obligations or misclassifying employees as independent contractors can result in legal consequences and reputational damage.

Despite long-standing employer obligations, wage underpayment remains a concern, with one in four workers missing super payments in 2021–2022. In response, the Australian government has introduced stricter laws, making intentional underpayments a criminal offence from January 2025, with severe penalties for employers and key personnel.

Single Touch Payroll (STP) reporting is an essential requirement that businesses must comply with when processing wages. Failure to lodge STP reports on time can lead to issues with superannuation reporting and trigger penalties. Furthermore, employee benefits must be accounted for correctly in bookkeeping and payroll systems. Certain allowances and benefits may be subject to Pay-As-You-Go Withholding (PAYGW), while others may attract fringe benefits tax (FBT).

For instance, we worked with a non-resident client whose initial non-resident bookkeeper neglected to submit STP reports, leading to superannuation payments being inaccurately reported. As a result, the business faced penalties and had to reconcile its payroll retrospectively, which was both costly and time-consuming.

Late or incorrect Business Activity Statement (BAS) lodgements
If you operate a business in Australia, you are required to lodge a BAS to report GST, PAYG withholding and other tax obligations. Late lodgement or incorrect reporting can result in fines and interest charges imposed by the ATO.

One of the most common mistakes international businesses make is the incorrect classification of expenses. For instance, entertainment-related expenses have specific GST treatment rules, and businesses that claim GST incorrectly on such expenses may face compliance issues.

Additionally, personal and business expenses must be separated. Claiming GST on personal expenses is a violation of ATO regulations and can result in financial penalties. Maintaining accurate records and understanding the tax treatment of different expense categories is crucial for compliance.

A case in point is an international client who initially claimed GST on entertainment expenses by mistake, believing it was deductible. This resulted in an incorrect BAS submission and additional costs to correct their filings after an ATO review.

Poor record-keeping practices
The ATO requires businesses to retain financial records for at least five years. However, international businesses often struggle with this requirement, particularly if they are accustomed to different record-keeping standards in their home country. Missing documentation can create difficulties in the event of an audit, and businesses that fail to maintain adequate records may be penalised.

Copies of tax invoices and receipts must be kept to substantiate transactions. Additionally, tax invoices issued to customers must comply with ATO standards, including the display of an Australian Business Number (ABN). Failure to meet these requirements can lead to compliance risks and rejected claims for GST credits.

This became evident when we assisted a non-resident client who was facing an ATO audit and was unable to produce proper documentation for several high-value transactions. This led to the denial of GST credits and additional scrutiny on their business.

Using an overseas chart of accounts and non-compliant bookkeeping systems
We have encountered so many international businesses attempt to apply their existing accounting framework to Australia without considering local compliance requirements. This often leads to reporting inconsistencies, misclassification of transactions and non-compliance with ATO regulations.

A properly structured chart of accounts is essential for ensuring that GST, PAYG and other tax settings are correctly applied. Failing to adapt financial systems to Australian requirements can result in errors in tax filings and financial statements.

To give an example, our non-resident client initially used an overseas bookkeeping system that did not accommodate Australian tax codes. This led to errors in GST reporting and required extensive reconfiguration of their accounts to comply with ATO requirements.

Inaccurate bank reconciliations
Regular bank reconciliations are essential for ensuring financial data accuracy. International businesses that fail to reconcile their bank transactions correctly may misreport their financial position, leading to cash flow mismanagement and tax filing errors. Unreconciled transactions can also increase the risk of fraud and undetected discrepancies.

A real-world scenario we encountered involved a client who did not perform regular bank reconciliations, leading to discrepancies between their reported revenue and actual bank deposits. This caused errors in their tax filings and required a time-consuming reconciliation process to correct.

Not understanding Australian tax obligations and failure to keep up with regulatory changes
Australia’s tax laws and accounting regulations frequently change, and international businesses that do not stay informed risk non-compliance. This includes updates to payroll tax, corporate income tax and superannuation requirements. For instance, the superannuation guarantee rate is set to increase to 12% in the fiscal year 2026 financial year, and businesses must prepare for this adjustment to avoid compliance issues.

Understanding local tax obligations is crucial for avoiding penalties and ensuring smooth business operations. International businesses must stay updated on regulatory changes and seek professional advice to ensure compliance with evolving tax laws.

Back in 2023, we advised a client who was unaware of the changes to superannuation rates and failed to budget for the increase. This resulted in unexpected financial strain when the 11.5% superannuation guarantee rate took effect on 1 July 2023, requiring last-minute adjustments to their payroll calculations.

Why is it necessary to hire an expert local bookkeeper?

Running a business in Australia without a local bookkeeping expert can expose your company to financial and legal risks. An Australian bookkeeper like us has specialised knowledge of local laws, tax requirements and accounting practices that are crucial for your business success. We have listed below the key reasons why engaging a local bookkeeper is essential:

Full compliance with ATO regulations
Australian taxation laws are complex, and mistakes can be costly. A local bookkeeper ensures that your business meets all ATO requirements, including GST compliance, BAS lodgements and income tax reporting.

Accurate payroll and superannuation management
You must comply with Australian employment laws, including correct payroll processing and mandatory superannuation contributions. A local bookkeeper like us ensures accurate calculations and on-time payments.    

Liaison with Australian regulatory bodies
A local bookkeeper can communicate directly with the ATO and the Australian Securities and Investments Commission (ASIC), ensuring your business remains compliant and up-to-date with regulatory changes.

Correct financial reporting
Australian bookkeeping and accounting standards differ from international frameworks. A local expert like us ensures your financial reports align with Australian standards, preventing audit risks and compliance issues.

Optimised cash flow and expense management
A professional local bookkeeper can help you manage cash flow effectively, ensuring that your business remains financially stable and efficient.

Key differences in expertise between non-resident and Australian bookkeepers

Non-resident bookkeepers may be highly skilled in their home country’s financial regulations but lack the expertise required to navigate Australia’s specific compliance requirements. Below is a comparison of key differences:

Why engage with ABN Australia for bookkeeping services?

Selecting the right local bookkeeping service provider is crucial for the success of your business in Australia. ABN Australia is a trusted partner for international businesses, offering expertise in Australian bookkeeping, compliance and financial management. Here is why you should choose us:

A team of Australian compliance experts
Our bookkeepers are well-versed in Australian tax regulations, payroll requirements and corporate compliance.

Customised bookkeeping solutions
Whether you require full bookkeeping management or support for BAS lodgements, we tailor our services to your business needs.

Technology-driven efficiency
We use industry-leading accounting software such as Xero, QuickBooks and MYOB to provide accurate and real-time financial reporting.

ATO and ASIC compliance support
Our team liaises directly with regulatory bodies, reducing the administrative burden on your business.

Cost-effective and scalable services
Whether you are a startup, small and medium-sized enterprise or multinational company, our bookkeeping solutions are designed to grow with your business.

For non-resident businesses expanding into Australia, hiring a local bookkeeper like us is not just a recommendation. It is a necessity. The complexities of Australian tax laws, compliance regulations and financial reporting standards require our expert knowledge that non-resident bookkeepers often lack. Engaging our services mitigates risk, ensures compliance and enhances financial efficiency. By partnering with ABN Australia, you gain a trusted local bookkeeping partner who understands the intricacies of doing business in Australia, allowing you to focus on growth and success.

Published: 14^th Mar 2025 | Last updated: 14^th Mar 2025