Unreliable or lumpy cashflow is rated by business owners as one of their greatest challenges. That, along with paying too much tax.
Put the two together and many business owners find themselves in a world of cashflow pain as low cash levels and extra high outgoings caused by meeting a large tax bill can cause stress levels to rise and the financial position of both the business and the business owner to suffer. Read on to find out why advance tax planning directly contributes to more effective cashflow management.
Advance tax planning and business advice can make a significant difference to your overall financial success.
Extending beyond tax compliance (tax reporting & tax returns), advance tax planning is strategic and provides clear steps and hands-on assistance for achieving tax efficiencies that can directly improve your cashflow, and for business owners – your personal finances.
Advance tax planning, as you’d expect, is about anticipating needs and rethinking decisions that can affect your overall tax position at the end of financial year. Advance tax planning, also influences the overall financial health of your business which hinges on good, consistent cashflow.
These matters may include decisions around depreciating, purchasing or selling assets, lending, superannuation contributions, stock levels, work in progress and numerous claimable tax deductions.
And, now is the time to take action.
Why? Because time is of the essence. Leave it too late and your business could miss out on a raft of tax deductions and concessions that can directly contribute to reducing your tax obligation. Reducing the amount of tax you pay will allow you to keep cash in your business for better uses including profit generating activities. The closer you get to June 30 the less options you’ll have to legally reduce your tax.
Importantly, advance tax planning shouldn’t be considered a one-trick pony.
Advance tax planning should be locked in as a regular must-do financial management activity that begins around the second quarter (September/October) when the prior year’s tax reporting is complete. This is the time for reviewing tax outcomes to determine how much tax was saved due to effective tax planning, and conversely, if you failed to plan, how much unnecessary tax was paid.
In our experience, when business owners take a proactive tax planning approach, tax-effective strategies can achieve many important benefits and you’ll ONLY pay as much tax as is absolutely necessary for meeting your legal obligations – no more and no less.
You’ll be in a better position to manage your cashflow, not just because you’ll pay less to the ATO, but because your advance tax planning discussion will identify major expenditures so that you can better plan how you will pay for them and when.
At Core, we offer tax report preparation services AND advanced tax planning advice. To learn about the benefits of advanced tax planning for your business or to make an advance tax planning appointment, please contact your Core business accountant on 07 5438 8088.