Top five tax planning tips for small business
We’ve all heard of businesses that failed because they suddenly received a large tax bill that they couldn’t pay. These stories are even more unfortunate, because in many cases, these failures could have been avoided with some simple forward tax planning.
As you’re reviewing your tax planning, keep these five simple tips in mind:
- Don’t just look in the “rear view mirror”. Ensure you have access to “real-time” information about your financial position right now.
- Don’t just look at the estimate of your tax liability for the year in question: understand and plan for the cashflow consequences of meeting next year’s quarterly tax instalments.
- As soon as you have reliable data, forecast your taxable income and understand the “worst case” tax scenario and how this would affect your cashflow.
- Understand whether you qualify as a “small business” for ATO purposes.
- Understand what tax planning concessions are available to “small businesses” relating to Depreciation, Trading Stock, Prepayments, Capital Gains Tax, GST on a “cash basis”, and FBT.
Do you have a question about tax planning? Contact us for a free consultation.