Tax Planning for Businesses

2021 Tax Planning Guide 2021 Tax Planning Guide

Tax planning can have some great benefits for businesses, large or small. It involves evaluating the business’s current financial situation, estimating probable profit or loss for the next quarter, and drawing up strategies to minimise tax while maximising the value of the business.

Let’s face it, if we can use thought out processes and strategies to reduce the amount of tax you have to pay, why wouldn’t you?!

Have you taken the time to think about how tax planning could benefit you?

A reduced tax bill
Let’s start with the most obvious advantage – reducing your income tax or CGT and other taxes on your savings, investments, assets and pension.

Strategise
Tax planning is a great opportunity to look at the options open to your business and fine-tune its strategies in all areas while the data is being analysed carefully.

See the big picture
Tax planning provides some great insights into a business that allow its owners to assess the larger situation: whether the structure of the business needs to change; understand where operations are occurring; get a sense of the potential profit areas currently untapped or underexplored; find new investment options and decide how best to structure those investments.

Superannuation optimisation
Tax planning offers a chance to look at your superannuation strategies and make them as effective as possible, with a range of options like salary sacrificing to super and self-managed super funds to consider.

Plan tax liabilities
On top of minimising your tax position, tax planning also gives you an opportunity to budget for the next 12 months of tax payments. In some cases, this can be substantial.

Tax planning enables you to look forward and budget accordingly for your tax liabilities for the coming 12 months, as well as being able to make decisions that could alter or reduce your tax liability. Since tax planning typically happens in April/May, you have 12 months to budget for the actual tax bill that will be due as a consequence of your end of year tax result.

In an ideal world, taxes would consume very little of our time and attention. In reality, taxes have the power to keep business owners up at night. Income tax is one of the largest expenses for most businesses and individuals, so it requires careful planning, budgeting and monitoring.

We have looked at the benefits of tax planning but what about the strategies that can help businesses to minimise worry and maximise good results?

• Plan your cashflow
• Consider your tax payment dates
• Pay superannuation liabilities
• Bring forward other expenses
• Make additional super contribution payments
• Vary down instalments

Your annual tax planning process doesn’t need to be complicated, but it should be thoughtful. When is the last time you conducted tax planning for your business? Are you prepared for the 2021 financial year tax implications if you don’t tax plan?

Contact The Money Edge if you need assistance with tax planning.

The Money Edge | Bundaberg