Itʼs that time of year again when we discuss with our clients the importance of tax planning. Tax planning is an essential tool for any business to undertake each year in order to effectively plan ahead towards the end of the financial year to ensure no nasty tax bills appear unexpectedly.
Timing is key when it comes to tax planning. Basically, good tax planning enables your accountant to calculate an estimated tax position so that lodgement of your tax return can be carefully planned. By your accountant reviewing your numbers and in turn your personal situation it allows for certain opportunities plans to be put into place to potentially reduce the burden of any amount of tax that is required to be paid. It is important that all data is accurate as the ATO is always tightening their reins around tax avoidance by small businesses.
Clients are busy running their successful businesses without the stress of thinking about tax, let alone planning for it. Being proactive and taking the opportunity to plan ahead is key in this whole exercise. Planning also assists with making important business decisions whilst allowing clearer direction in how your business is heading towards the future.
Below are a few key tips in getting the whole tax planning exercise right:
- Firstly, get your record keeping up to date and reconciled up to a specific date. Using cloud software such as Xero is great for ensuring this is completed correctly and accurately.
- Reviewing your accounts receivable trade debtors is important in ensuring you get paid on time and only taxed on total income billed. This is also a great time to chase those debtors who are outside your payment terms.
- Then on the flip side, making sure all your business expenses are recognised is also important. This excludes superannuation. Take the time to chase up those suppliers who have yet to bill you.
- Reviewing your asset register to capture any obsolete items which can be written off and a tax deduction taken up.
- Making sure your payroll and superannuation are up to date is also essential.
- And of course, stay in regular contact with your accountant. Tax planning is one service we offer to all our business clients – big or small.
Look at tax planning as an opportunity to discuss your financial future with your accountant not just a time to minimise tax. This could also be a good time to consider your superannuation, insurance and estate planning plans. If you would like to discuss your financial position with your accountant please contact our office on 5413 9300.