What is a tax plan and should my business have one?

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What is a tax plan and should my business have one?

Put simply, tax planning is a way of minimising the tax you pay. It’s a process of looking at your complete financial situation and projecting your future income in order to predict your tax liability and take advantage of opportunities to decrease your tax bill before the end of the financial year.

Tax planning is crucial for business owners, particularly those who earn income from multiple sources, such as employee wages and side hustle income. It’s also helpful for individuals, couples and families looking to understand and grow their personal wealth. 

Tax rules change every financial year and business owners may find they have new obligations to comply with, or new tax minimisation options to explore. That’s why it’s important to have an accountant who is not just applying the same checklist to every client, but who understands your unique business goals and proactively researches and identifies new opportunities to optimise the financial position of your business. 

A skilled accountant knows the difference between legal tax minimisation strategies and unlawful tax avoidance schemes, and will always comply with the law and minimise your risk. 

So, do you need a tax plan? That depends if you can confidently answer the following questions.

  1. What is your anticipated business revenue for the financial year?
  2. What is your expected tax rate?
  3. Does a cash or accrual accounting method produce better results for your business?
  4. If you hold stock, are you required to complete a stocktake or is your business eligible to rely on the simplified trading stock rules?
  5. Are you eligible for instant asset write off? If so, what business assets can be acquired and written off, and what limits apply? 
  6. Is your business eligible to claim a tax offset for previous years tax liabilities under the new tax loss carry back regime?
  7. What’s the value of your outstanding debtor and creditor accounts? 

How’d you go? It’s not easy. We can’t all be expected to be accounting nerds, but the financial success of your business depends on the quality of tax planning and advice that powers your decision-making. 

YOUtax loves to simplify the ever-changing complexities of the tax system to provide our small business clients with financial transparency and confidence to achieve their goals. If you want YOUtax in your corner, book a free consultation below to interview us and see if we’re the right fit to help your business thrive. 

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