Business Tax Planning – Why pay more tax than you legally need to?
Tax planning is an investment in your business success – because when it comes to tax, what you don’t plan for can hurt your business. If you suspect you may be paying more tax than you legally need to, book a Tax Planning review with our Melton Tax Accountants.
What is business tax planning?
Business tax planning involves reviewing your business to ensure that your profits are being managed in the best possible way to legitimately minimise the amount of tax payable to the government each year.
Tax planning focuses on tax minimisation; and when done correctly, it is legal. The ATO describes tax planning as ‘the right to arrange your financial affairs to keep your tax to a minimum’. Of course, tax planning strategies must be made ‘within the letter and the spirit of the law’ so as not to be considered tax avoidance or evasion.
Tax law is complex and forever changing and its application varies according to the unique circumstances of your business. It’s important to know that a tax planning strategy that works for one business, may not be the right tax planning strategy for your business.
Well-meaning friends and family are often eager to share their ideas and suggestions about tax minimisation strategies, however if they’re not experienced tax accounts we suggest you take it with a grain of salt! This is why it’s important to have your tax planning needs carefully reviewed by an experienced business tax accountant.
Business tax planning is an all-year-round activity but generally takes place in the months preceding the end of financial year when a business owner’s sensitivity to tax increases. However meaningful tax planning sessions rely on you maintaining accurate and up-to-date business bookkeeping records. Without perfect bookkeeping and financial records, your ability to plan for tax will be limited and inaccurate. If you need assistance with better business record management, you can learn more about our business bookkeeping services here.
Remember, tax minimisation does not mean that you eliminate paying tax altogether. In fact, if your business is not paying tax it could be symptomatic of an underlying problem within your business operations.
What are the benefits of Business Tax Planning?
Our tax planning sessions form a key role in reaching your profit goals. We thoroughly examine the tax deductions that apply to your business and canvass all tax minimisation opportunities in the context of your business and personal circumstances.
The key benefit of business tax planning is that you will know the exact steps you’ll need to take before year end so that your business retains the maximum amount of profit while legally minimising its tax liabilities.
You will also have an idea of your estimated tax liability well in advance of the end of financial year and tax payment deadlines. Business tax planning also involves taking stock of assets, considering the suitability of your current business structure and allows you sufficient time to prepare and utilise the various tax breaks available in the year under review.
How is Tax Planning different to a Business Health Check?
Tax planning is often undertaken in the final months of the financial year. Typically you will meet with your accountant during April and May each year to explore strategies that you can action before 30 June to reduce or delay a tax liability. Tax planning is an important annual task for any business owner, however it will not give you the key information you need to make strategic business decisions into the future.
A Business Health Check, on the other hand, is an activity designed to assess the true overall performance of your business. It uncovers any areas of your business that require better management and fine tuning. It will identify the business processes and functions that are not working optimally and extract information that can be used for strategic business planning and proactive change. Speak with our specialist business accountants in Melton to learn more about our Business Health Check service.
Tax Planning Accountants in Melton
We’re business accountants in Melton with a unique holistic approach to tax planning.
If you’re ready to discover constructive methods and strategies to legally minimise your tax payable, we invite you to book your tax planning session with Platinum Accounting & Taxation in Melton. Contact our office on (03) 9746 6479 or via our contact page.