Tax Planning and Advice for Small Business
Tax planning or tax advice is crucial to ensure that you maximise the earnings from your business.Tax planning or tax advice is crucial to ensure that you maximise the earnings from your business.
You’ve spent the year doing early mornings, late nights, dealing with clients and issues in your business that were complex and stressful. There is no need to add to the situation at tax time.
Tax planning and tax advice is not a cost but an investment in your business future. Making the wrong decision, buying an asset in the wrong entity, not claiming a deduction you were entitled to or expecting a deduction you were not entitled to can have serious financial implications.
It is important that you appreciate that tax advice is not an afterthought done after the 30th June each year. Tax planning and advice is a continuous discussion between you the business owner, and your accountant. You need to consider and take action on tax tips during the year.
1. Make collections and recording GST your first priority.
Ensure that you have the processes in place to meet your GST obligations. The first tip is to open a GST bank account. Force yourself to deposit around 7% of your turnover into the account. Most businesses will claim 3% or more of their turnover as GST paid. This way you’ll never be caught out with a large unpayable GST bill. If you want a more accurate calculation, ask us to review your invoices.
2. Stay under the ATO radar.
The best way to do this is to pay your taxes on time. Ensure you know when taxes are due. Pencil these dates onto the calendar and make sure you have the funds to pay your tax obligations.
3. Keep your personal finances separate
Too many business owners blur the lines between business and personal expenses. No, the business cannot pay for everything at home. If you borrow money from the company then they need to be repaid in a timely manner, preferably before the end of the financial year.
4. Keep timely, accurate records
How much time do you spend on bookkeeping? How many more sales could you make if you weren’t stuck doing the books? Done correctly, software like Xero and MYOB make your life so much easier and save you time – time that could be spent making more money. Make sure you keep accurate records. Take time each week for efficient business management. All records must be kept, recorded and stored for ease of use. Remember, all records must be available for the Tax office for a period of seven years. The last thing you want is to be in the midst of a tax audit and not have evidence of your transactions.
Do you need help navigating the complex nature of taxation? Nathan, our Springwood local and small business accountant, prides himself on tax-effective strategies that allows small businesses like yours to grow. Ask us for a review of your tax obligations and processes today.