Most business owners end up paying too much tax simply because they are too busy to plan ahead.
Visiting your Perth tax accountant in May or June might be too late. By then, you have missed opportunities to optimise your tax position. The best you can hope for is a favourable tax return from the ATO. Tax planning throughout the year does not need to be complicated or stressful. By starting early and working with a business accountant who knows your industry, you can avoid nasty surprises at tax time and maximise potential returns.
The goal is to integrate tax planning with business planning so that every business decision benefits your bottom line. Here are three ways your business might be missing out.
Missing opportunities to strategically reduce your tax liability
Australia’s tax laws are complex and constantly changing. As small business accounting specialists, we look at the big picture for small business owners:
- Writing down bad debt
- Prepaying expenses
- Maximising valuable deductions
- Strategically planning major purchases
- Considering cashflow
Any good tax accountant should look beyond the minimum tax compliance obligations. Tax planning helps small businesses legally minimise the money they need to pay at tax time. But more importantly, it supports the company’s growth by reducing expenses and planning for the future.
Separating personal wealth from business tax
As a small business owner, your personal financial goals are inextricably linked to your company’s tax obligations. It’s important not to mix personal and business finances. Instead, consider how the money your business makes affects your personal situation.
In particular, you should ask your tax accountant about:
- Self-managed super funds (SMSF)
- Managing distributions like bonuses and dividends
- Superannuation contributions
- Trusts and corporate structures
- Building a portfolio alongside your business
These are considerations for the entire year, not just tax time. But setting up a trust and managing dividends can be confusing and time-consuming. That’s where an experienced tax advisor specialising in small business accounting can help to untangle the financial complexities and put you on a path to a comfortable retirement.
Making purchases and investments without considering tax implications
Almost every decision you make about your business impacts its tax position. As your operation grows, acquires assets, hires employees or attracts investors, the company’s tax position changes. So effective tax planning means integrating tax planning into business strategies and financial forecasting instead of keeping them separate. With careful planning and good timing, small businesses can invest in growth while optimising their tax position. We’d call that a win-win.
Expert tax advice from Perth’s small business accounting and tax specialists
Tax time is just around the corner, so now is the time to review your business’ tax position with a reliable tax accountant. If you think your business might be paying too much tax, get in touch with Linc Accountants. We go beyond tax compliance to develop long-term strategies focused on legally minimising tax obligations and growing small businesses with modern accounting.
Contact our small business tax accountants for personalised accounting services and a simpler tax solution.