We understand that our clients are busy. Every small business owner has fires to fight, customers to delight and a business to build. The very last thing you want to think about is tax. That’s what accountants are for!
Usually we would agree. But this is the one time of year when we encourage all of our clients to start thinking about the taxes they will be liable for once 30 June ticks over.
The reason is simple. With a little bit of planning it is possible to reduce the amount of taxes you owe and boost the funds available to reinvest in your business or build your personal wealth. If that sentence alone doesn’t persuade you, here are five other reasons it’s a good idea to start planning.
Take Advantage of Budget Changes
Last year’s budget brought some real advantages for any business with turn over under $2million. In particular the ability to immediately deduct assets valued at up to $20,000 means small business owners need to plan the timing of major (and minor) asset purchases carefully.
Make the Most of Superannuation
Contributing to your superannuation is not only a critical part of building your personal wealth; it also has important tax implications. The 15% rate levied on super contributions is significantly lower than company tax or any marginal tax rate above the initial $18,200 threshold. As contributions must be made before 30 June, it is important to plan for any additional payments.
Use Your Trust Structure to Your Advantage
If you are operating with a trust structure, then it is important that a decision be made on how trust income will be distributed to beneficiaries before 30 June. A little bit of planning can ensure that distributions are made in a manner that minimises total taxes.
Make Sure You Are On the Right Side of the Law
Tax law is tricky, and it is easy to unintentionally step outside what’s legal. Even if you didn’t mean to break the law, mistakes can incur costly fines from the ATO. A prime example is investing over the allowed superannuation contribution cap. We’ve seen too many client’s get caught out by this. So it’s important to take some time to review things before year end to make sure your legal ducks are in a row.
Understand Your Business Better
Any time you plan, whether it’s for yourself, your bank manager or the tax department, you will be learning more about your business. The tax planning process will help you to understand your business’s financial performance.
Our tax planning eBook Keep More Money in Your Pocket is officially being launched in two weeks time. But we are making copies available to our newsletter readers now, so you can get the jump on the planning process.
Download the guide today and start thinking about how best to position yourself for the end of the tax year.
We also encourage all clients with complex structures to set up a meeting with their accountant as soon as possible, to enable us to help with the tax planning process. If you don’t yet have a meeting planned, please contact us today.