Business owners commonly pay more tax than they need to. One small mistake can lead to BIG tax consequences for your business, yet all it takes is a little planning to avoid paying more than you should.
If you want to legally minimise your tax obligations and avoid nasty surprises at tax time, you need to be looking forward, not backwards. An annual visit to your accountant at tax time is unlikely to improve your business and personal tax outcomes. If you are leaving your tax planning until May or June each year, your business could be missing out.
Tax planning is not complicated, but it’s important to start early – we suggest July – at the beginning of the financial year, not the end. Here are three of our tax planning tips that outline how you can achieve tax advantages for your business.
#1: Your business decisions affect your tax position
It is important to understand that business activities such as major asset purchases, funding decisions, depreciation of assets, claimable deductions and personal superannuation contributions, all have a significant impact on your tax liability.
Effective tax planning is about integrating tax within your overall business planning for achieving both business growth and your personal financial goals.
Our tax planning service helps you achieve the best possible tax position through:
- Understanding your expected business profit, personal taxable income and projected tax liability for the year ahead.
- Considering the longer term decisions which will impact both your bottom line and your tax position and plan accordingly for major asset purchases, funding decisions, depreciation of assets, claimable deductions and personal superannuation contributions.
#2: Make the most of available strategies to reduce your tax liability
Appropriate tax planning strategies for your business may include:
- planning the timing of capital purchases
- writing off bad debt in the current financial year
- prepaying expenses
- considering additional personal superannuation contributions or employee bonuses.
Tax planning strategies should consider the overall impact for your business including cashflow needs, debt management, capital purchase requirements and ultimately, the amount of tax you are legally obligated to pay.
Australia’s tax laws are complex, and our approach is to look at the big picture for your business, not just tax compliance obligations. An unplanned tax bill can wreak havoc on business cashflow and general operations, so our tax planning is hardwired into our advice approach, and is scheduled and delivered as a core service to consider the most appropriate options for your business.
#3: Don’t forget your personal wealth
Your personal financial prosperity is coupled with the outcomes of your business. This is why tax planning must also consider your personal financial goals, including how to make the most of your income and accumulate adequate retirement savings.
Strategies to protect your assets, grow wealth and create personal tax efficiencies may include advice on Self Managed Super Funds or superannuation contributions, appropriate trust structures and managing distributions, as well as helping you build a significant asset portfolio alongside your business.
If you would like to know more about effective tax strategies for your business that also consider your personal financial prosperity, I encourage you to give us a call on 03 9708 8801 or email info@rvpartners.com.au
At Robinson Voss Partners, we have over 40 years combined experience and expertise in accounting, business advice and specialised tax issues.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
