There are THREE parts to effectively managing tax. Most business owners are familiar with the first two: Tax reporting that comprises preparation of a range of tax returns required by the ATO; and tax payments which are the direct result of the aforementioned tax reports.
The third, and perhaps the most important part of effective tax management is tax planning and many business owners are a little in the dark about the benefits. Read on to find our how advance tax planning can result in paying less tax, but also a raft of other business benefits.
Advance tax planning advice is distinct from tax return preparation.
This higher-level advice is central to taking a proactive overall financial management approach to your business and personal finances, whereas tax reporting (including tax return preparation) is an after-the-fact activity.
Tax planning is specific to individual circumstances, but generally speaking as we move towards the final quarter of each financial year, (mid-April / May) you should be considering the opportunities available to you and, while there is still time, implementing actions to benefit from tax efficiencies.
Once the calendar turns over to June 30, those opportunities and outcomes will no longer be available. Your tax commitment will be set and you will have few, if any other options, but to pay the tax necessary to meet your obligations.
Advance tax planning advice involves a formal discussion to identify business matters that can mitigate or better still, help business owners to avoid negative tax impacts which includes paying more than is necessary or a nasty surprise of more tax than was expected at tax time.
These impacts commonly affect your cashflow, debt management, equipment and material purchases, the amount of tax you pay, and ultimately for the business owner – your personal prosperity.
For example, you may have decided to purchase a new truck to help with deliveries, however when and how you purchase that vehicle could have significant benefits or consequences on your general financial position in addition to tax repercussions.
Your options may include bringing forward the purchase to the current tax year and claiming tax deductions to reduce your tax bill or it may be more beneficial for you to defer the purchase until the next financial year to take pressure off your cashflow.
For the best possible outcomes for your business, advance tax planning and business advice can make a considerable difference to outcomes that affect your business success and as the business owner – your personal prosperity.
At Core, we offer tax report preparation services AND advance tax planning advice. To learn about the benefits of advance tax planning for your business or to make a tax planning appointment, please contact your Core business accountant on 07 5438 8088, or visit our TAX PLANNING page here on our website.