The importance of tax planning for small business owners

We want our clients to focus on tax planning all year round, but this time of year in particular is very important when it comes to planning your tax.

Many business owners have reduced their 2022 PAYG instalments to Nil during the COVID-19 period, but now you may find that you have generated profits this year and you may have tax to plan for.

With the recently released 2022 Federal Budget and the Federal Election coming up, there will be a lot of tax changes announced that may affect small businesses.

Now is the time to review what strategies you can use to minimise your tax before 30 June 2022.

Read on to find out how tax planning can help your business in the long run.

What is tax planning?

Tax planning is the process of implementing a strategy to manage any tax liabilities your business has, while meeting all legal requirements of the Australian Taxation Office (ATO).

Tax Planning involves 3 key areas:

Strategies to reduce your tax
Planning for your upcoming tax payments over the next 12 months
Ensuring you are maximising any tax opportunities available to you and your business.

Put simply, it means that you are across everything you need to know, so there are no surprises!

While tax planning may seem complicated, our team are here to take the stress out of managing it for you.

Benefits and ways to tax plan

We mentioned that tax planning can help avoid surprises, but by implementing a tax planning strategy your business could reduce its taxable income and increase growth opportunities through effective wealth management.

Essentially, if done correctly, tax planning can help improve your business’s bottom line.

One of the easiest ways to organise a valuable tax plan for your business is through tax minimisation. We are here to help you implement a tax plan within the ATO regulations for your business.

There are many ways to do this including:

Temporary full expensing of assets purchased
Maximising deductible super contributions, including carried forward contributions
Deferring income
Bring forward expenses
Manage timing of investment income and capital events
Write off bad debts
Home office expenses
Covid 19 Test expenses

If you’re a small business owner, managing your tax planning in a legal and legitimate way on top of other business responsibilities can be difficult.

We offer accounting expertise crafted to your business’s needs, allowing you to focus on your business while we manage the financial side of things.

Tips and tricks

Understanding the importance of tax planning is one thing, putting steps into action to make it happen is another. Here are our team’s tips and tricks when it comes to tax planning.

Reinvest – investing your funds saved from tax planning is a smart was to boost your business’s bottom line and encourage responsible wealth management.
Strategise – contact a trusted financial advisor to receive current and relevant information to you and your business.
Start planning now – the sooner you start planning your tax, the better off your business will be in the long run.
Do your research – stay up to date with changes made by the ATO that may impact your business. Do this by talking to an accredited business accountant and researching legalities around tax planning before implementing a strategy.
Watch out for tax avoidance schemes – this includes promoters promising tax benefits that aren’t legally available. The ATO has resource dedicated to taxpayer alerts and a tip-off form for any suspicious behaviour you may notice.

To put you in the best position to plan your business’s tax, contact us today.