Tax time is looming, Ladies with Tradies! There are a few things you need to be mindful of when it comes to this time of year - let's go over just a few:
- Account for profitability and cashflow, not just tax dodging!
When your accountant says, 'you need to spend some money, or you will pay too much tax' - DO NOT just run out and buy everything on the shelf at Milwaukee, people!! Stop for a moment and think hard about what you can CASHFLOW and how it might impact your financing position. This brings me to point #2
- Are you planning on financing anything soon?
If you plan on taking out a mortgage, purchasing any commercial property or equipment, you might want to slow down before you try to reduce your taxable income. The banks are looking at your profitability in your business (net profit); they are assessing whether or not they want to loan you any cash. If you are a nutter and try and 'reduce your taxable income' to ensure you pay less tax, this will most certainly bite you in the bum into the future when lending, so...
- Organise a tax planning session well BEFORE June 30
We recommend you get your butt into gear and see your accountant NOW. At least three months before is a perfect time. Make sure you are clear about your personal goals and how any future purchases you might like to make, as these will be somewhat dependent on your taxable income, so your accountant can factor this in. For example, if you want to purchase a home, you know you need to have a taxable income of $100k to get the finance - you need to inform your accountant, so they can factor this into how they assist you in accounting for tax.
- Keep your books and your BAS up to date!
People with tax issues are usually the people who are not keeping their reconciling and bookkeeping up to date. They are reactive, and they end up stealing from Peter to give to Paul. If you are dreading tax time each quarter and each year, this will most likely be because you are not planning well enough for it. Talk with your accountant, bookkeeper or other mentors to determine how much you need to be setting aside on average per quarter/year to account for the tax you need to be paying.
- Get a bookkeeper - they are a godsend!
Most people don't love the bookkeeping side of their business, but they keep holding onto it because 'it's just another expense in the business if I give it to someone else'. Our experience as coaches tells us that our most successful clients outsource their bookkeeping. It creates space for them to work on other essential areas of the business, which as a result, actually brings in more income. Also, if you are struggling to pay tax, they have relationships with the ATO that enable them to get you longer terms on your tax bills - how amazing is that?! They also ensure that you don't get any nasty surprises - and the best ones do more than just reconcile your accounts - they do BAS, reporting and set up your structure so that you have good data to make better choices for your business. Try our amazing Trusted Advisor Janelle.