Tax Planning Tips for Businesses 

As the owner of a business, it is your responsibility to ensure that your taxes are submitted on time and in the correct manner. The process of tax preparation, on the other hand, can be intimidating, particularly if one is not well versed in all of the relevant laws and guidelines. Here is where we come in to play! In this piece, we will discuss several suggestions that will make the process of tax planning more simpler. Continue reading, and then get started!

You have a lot of responsibilities to take care of as the owner of a business. It's possible that you don't have time to prepare your taxes on top of all the other responsibilities you have, such as managing personnel, making sure customers are happy, and guaranteeing financial stability. However, failing to make preparations in advance can result in expensive fines and penalties. Therefore, in order to help make tax season a bit less stressful, here are some recommendations that you may follow.

You are the owner of a business, therefore you are aware of how crucial it is to remain on top of your taxes. However, it may be difficult to determine where to begin. Because of this, we have compiled this collection of tax preparation suggestions geared exclusively towards commercial enterprises. If you follow these guidelines, you will have a lower tax burden and more money in your pocket at the end of the year. What exactly are you looking forwards to? Get the planning started right away!

Tax Planning and the Possibilities Available to You

I wanted to take this opportunity to have a brief conversation with you about the tax preparation and some of the opportunities that may be available before the 30th of June.

To get things started, I'd like to go over some of the options that will be available.

Income: Depending on the circumstances, you may be able to postpone some of your income as well as the tax obligations that are associated with it.

Realising capital losses: If you have had some capital gains throughout the year, there is always the possibility that you might be able to defer or minimise some of the tax by realising some losses on shares that you feel like you do not need to hold any longer. One way to do this is to sell shares that you feel you do not need to hold any longer.

Writing off bad debt: Although writing off bad debt is a contentious topic, if you have taken all of the proper efforts to collect a debt, you are eligible to get a tax deduction for the amounts that you write off as bad debt.

One further significant regulation change that took place not too long ago concerns the small business entity test. Companies that meet the requirements of this test and have a turnover and group turnover of less than $10 million are now eligible to take advantage of some of these wonderful laws. In addition, there is an immediate right-off for plant and equipment in the amount of $20,000; this has just been extended until the 30th of June following the latest pronouncements regarding the budget.

When it comes to your GST, there is the possibility of switching from an accrual basis to a cash one; if you have a large number of customers who owe you money, this could be a chance to boost your company's cash flow.

• Pre-payments: When you make prepayments for expenses, those sums are traditionally considered a capital loss on your balance sheet, and there are no deductions that can be taken for them. However, if you qualify for a deduction under the regulations for small entities, you will receive it right away.
• The Expenses: There is the possibility that we will accumulate wages. You are eligible to take a tax deduction for these earnings even though they have not yet been paid out to your employees; however, because you have already spent the associated expenses.
• Review of your depreciation schedule: I'm wondering whether there is any equipment that has been written up to a greater value than it actually corresponds to, or if there are any pieces of equipment that you no longer use. This is something that can be written off and counted as a deduction for us in the current year.
• Review of your inventory: Do you have slow-moving inventory that has to be written off, or stock that you don't even have anymore that needs to be written off? If so, you might consider doing one of these things.

The cash flow planning that we perform as part of our tax planning process is among the most significant aspects of that process. Therefore, it is extremely important for us to comprehend the timing of your tax payments and the timing of any tax instalments that you may have.

Is it possible to change any of the sums and keep the money in your bank account rather than transferring it to the ATO's account.

I want to emphasise how vital it is to have the distribution minutes signed by everyone before the 30th of June. Over the course of the years, the ATO audit activity has developed, and I cannot place enough emphasis on the significance of having accurate distribution minutes that have been signed off.

Building up to optimise your tax situation is really part of the process that we go through for tax planning.

When it comes to superannuation, some of you may not be aware that there are new limits in place for the new fiscal year. In addition, one of the other ways that you can get a deduction for your business is if you pay for the superannuation of all of your staff and employees before the 30th of June of that year. It is not tax-deductible until you have made a payment.

Be careful, the 30th of June will fall on a Saturday this year, so you'll want to make sure all of your payments are done in plenty of time and that they clear your bank accounts before that day.

Other aspects of tax planning to consider include Division 7A and whether or if there is a possibility for us to make cash payments rather than declare a dividend. There are some pre-UPEs, and the current budget release included pre-UPEs in the scope of the new rules that apply to division 7A beginning on July 1, 2019.

The opportunity to begin paying directors a dividend rather than a wage is one of the benefits of utilising Single Touch Payroll. To reiterate, we should begin working on getting these items right away rather than waiting until 2019 to start arranging our taxes.

Utilise These Wise Tax Saving Strategies To Lower The Taxes Your Business Pays

Do you ever feel like the amount of tax you pay is excessive? When it comes to methods for lowering one's tax burden, we are the industry leaders. Get in touch with us as soon as possible to find out which tactics would be suitable for your company and how you can get started on these before the end of the fiscal year comes around.

Pre-pay your expenses

While you are still in the current fiscal year, you should begin paying for some of the expenses you will incur in the following fiscal year in advance. This may include things like your mortgage, car payments, and membership dues to any professional organisations you belong to. The current tax year allows for the deduction of up to 12 months' worth of costs from the next year.

Take advantage of the $150,000 instant asset write-off

Because of this, you are allowed to make an instant deduction against the tax owed on your business income for any new or used assets that you invest in for your company.

Review your invoicing

You should go through the invoices you have to send out for the current tax year and see if any of them may be pushed back to the following year.

Contribute to your super

Increase the amount you're contributing to your voluntary superannuation plan. Always keep in mind that your deductible contributions to your retirement account might reach up to $25,000 per year.

Review your debtors

Conduct an audit of your debtors and write off any debts that cannot be recovered. Regardless of the year in which you initially charged your clients for these services, the income you report for that year will reflect the write-off of these debts.

Are you using the right investment structures?

Examine the structure of your company, as well as your personal assets and the locations of your investments. Certain structures have the ability to benefit from tax rates that are either lowered or capped. For instance, a company structure that is capped at a tax rate of 27.5% can make a considerable impact in the event that your investments create a significant amount of income.

Make and document any trust resolutions

The trustees of discretionary trusts have until the 30th of June of each year to make and document their resolutions regarding the manner in which the income from the trust is distributed to the beneficiaries of the trust.

If a legal resolution is not made by this date, then any default beneficiaries will be entitled to the income of the trust and will be liable to taxation on that income. The trust will be subject to the highest marginal tax rate on any income that is generated but not dispersed by the trust. This applies to any and all income generated by the trust.

Take advantage of Early Stage Investment Companies

You are able to take advantage of many attractive concessions if you make an investment in an Early Stage Investment Company (ESIC). If you invest in a new business under the ESIC concessions, you are eligible to receive a tax credit equal to 20% of the amount you invested. Investing in an ESIC also exempts investors from paying tax on capital gains for a period of ten years. When you sell the investment after having held it for fewer than 10 years, you won't have to pay any additional tax because of this.

Join an Early Stage Venture Capital Limited Partnership

This structure is comparable to that of an ESIC, but it allows for the participation of a greater number of investors. In addition, making investments of this kind enables you to obtain a tax deduction equal to 10% of the total value of any investments made.

Take advantage of negative gearing on any investment properties

You are eligible to take a tax deduction for the difference between the amount of money you earn from your investment property and the amount of money it costs you to maintain and keep it as an investment. Be mindful, however, that for this method to be successful, the underlying asset's value must first rise before it can be put to use.

Look into income protection

Not only does purchasing income protection give you the piece of mind that comes with knowing that your loved ones will be provided for in the event that something unfortunate happens to you, but it also entitles you to a tax benefit.

Take advantage of depreciation

You should go over your depreciation schedule and write off totally any things that are no longer in use.

Delay deriving assessable income

Consider postponing the collection of some of your taxable income until after the 30th of June if doing so makes sense in the circumstances and won't have a negative impact on your liquidity. In most cases, a person is regarded to have earned revenue when:

• The payment was obtained and is being processed
• It has been made available that there are things
• The services have already been carried out.

On the other hand, this only applies to you if your GST registration is based on cash transactions. Please go to tip number three if you are registered under the accruals heading.

Complete a stocktake

Perform an evaluation of the value of your stock and write off any that is damaged or no longer needed. The next step is to do a stocktake, and you should keep in mind that inventory can be appraised either at its lower cost or its nett realisable value.

Are you taking advantage of tax rebates?

It is imperative that you make use of any and all appropriate tax rebates that are at your disposal. Depending on your situation, you could qualify for a variety of rebates, such as those for educational expenses, spouse super contributions, and medical expenses.

Update your vehicle logbook/s

Keeping your logbooks up to date ensures that you are claiming the most accurate amounts possible for your expenses related to your motor vehicle.

Know what’s on the ATO’s watchlist

When it is time for tax season in Australia, the Australian Taxation Office (ATO) loves to inform taxpayers about the items it is watching closely for the upcoming year. Therefore, it is in your best interest to be informed of what is on their target list. Typical examples include fees associated with a home office, a motor vehicle, or educational endeavours.

Keep thorough records

If you keep better records for your taxes, you'll be able to substantiate more deductions, which will result in a lower overall tax bill. Keeping detailed records also guarantees that you will be able to provide accurate responses to the ATO in the event that they have questions regarding your tax returns.

Start your business exit planning now

It is critical that you initiate planning immediately for a potential exit strategy for your company if you are considering selling it in the near or far future. If you properly plan how to acquire access to capital gains tax reductions for small businesses, you may be able to save tens of thousands of dollars or even hundreds of thousands of dollars in taxes when it comes time to sell your business. Consequently, there is no better moment than the present to initiate the planning process.

Undertake strategic tax planning with your accountant

Tax planning may be broken down into two categories: short-term and long-term tax planning, and good accountants look at both. The goal of short-term planning is to minimise the amount of money you pay in taxes for the current fiscal year by taking action before June 30. Long-term tax planning considers both the kinds of investments you can make and the ways in which you can organise your company so as to pay the least amount of tax possible over the course of the company's lifetime.

Small Business Tax Planning Tips

Did you know that proper tax preparation for your small business can assist in lowering the amount of taxes that you are responsible for paying? Tax planning is an essential component to consider whenever you have expansion plans for your company because it helps shape your entire strategy.

Tax planning, as opposed to tax preparation, which is when you get your taxes ready for quarterly or year-end filings, entails giving careful consideration to the deductions and credits that your company can take throughout the year to help lower the amount of taxes that it is required to pay at the end of the year. Tax preparation can also assist you understand what documents you are required to file and which records you should retain.

Small business tax planning can result in significant cost reductions for your company if it is carried out with the assistance of a certified public accountant (CPA) or tax expert.

What Errors Do Small Business Owners Usually Commit In Tax Planning?

When running their companies, proprietors of small businesses frequently have to wear a variety of hats. They are responsible for a variety of tasks, including marketing, product development, employee management, bookkeeping, and more. The unfortunate reality is that the owner of the small business spends so much time working in the business that they have very little time to run the business.

When it comes to tax planning, one of the most common errors that small business owners make is regarding it as an activity that should be done after the year has ended. Many people don't undertake much tax planning before the end of the year, and as a result, they miss out on any real chances to lower their taxable income. This is especially true for taxpayers who deal with cash, as the timing of cash transactions and payments to vendors can have a considerable influence on current year earnings. You may be eligible to take a deduction for prepayment of expenses, for instance, if your company is a cash-based taxpayer, provided that the period of time covered by the deduction does not go beyond 12 months or beyond the end of the following tax year.

In addition, owners of small businesses frequently fail to acknowledge the existence of additional significant compliance responsibilities associated with their companies. These include the requirement to register as a sales tax vendor, the completion of annual forms 1099-MISC for their suppliers, and the differentiation of workers and subcontractors in the appropriate manner. In the event that your company does not correctly comply with the rules connected to the aforementioned issues, you run the risk of incurring severe tax liabilities.

What Are Some Tax Advice for Small Businesses?

The process of tax preparation is not a one-time endeavour that you carry out once a year for your company. Instead, there are a number of things you can do throughout the year to put yourself in the best possible position when it comes time to work on your taxes.

• First and foremost, make sure you have accurate financial records and that you reconcile your bank accounts on a monthly basis. To keep your financial records organised and up to date, you should think about investing in software such as QuickBooks or Peachtree. By maintaining thorough records, you will be able to obtain an accurate picture of your company, which may serve as the foundation for any tax preparation techniques or decision making that you may be contemplating. You will also be able to design plans to solve difficulties relating to inventory, personnel, and other concerns with the use of this information.
• If you have any queries or worries about your taxes at any point during the year, you should look into hiring a good certified public accountant (CPA) or tax advisor. Find ways to reduce your company's tax burden by attending one of your scheduled quarterly or semi-annual meetings to discuss tax planning.

If you don't already work with a certified public accountant (CPA), you should be aware that this kind of specialist can continue to be an integral member of your small company team even after tax season has ended. They are able to provide assistance with financial planning, estate planning, business succession planning, and other accounting services. If you want to discover a CPA who is a good fit for your company, you should poll other business owners for referrals and suggestions, and you should also examine the CPA's references.

• Do not make a significant acquisition of machinery or automobiles for the sole aim of lowering your taxable income. Instead, you should think about whether or not the acquisition will improve your process and how it affects your profitability.

What Kinds Of Typical Deductions Are There For Little Businesses?

A tax deduction can be claimed for virtually any expense that is reasonable and essential to the running of your company. The cost of items sold, wages and taxes, the cost of occupancy, marketing, insurance, travel and entertainment expenses, and so on and so forth are all examples of common deductions.

It is essential to keep accurate records in order to corroborate business expenses and demonstrate that the costs were indeed business-related. For instance, expenses related to entertaining clients or customers should include a description of who attended as well as the nature of the business that was discussed. This information will be required in the event that an audit is conducted. In a similar vein, you will be required to keep a record of the miles associated with business travel whenever you or one of your employees uses a vehicle owned by the firm.

When claiming tax deductions for your company, you must be able to provide proof that the money spent was for legitimate business purposes. It is not sufficient to just provide a copy of the check that was used to pay for a cost or a credit card statement that indicates the purchase as evidence of the transaction. You will be required to keep a copy of the original invoice from the vendor or another form of proof showing the purchase. Always make sure to receive a receipt, and this is especially important when paying cash.

Does Your Company's Structure Affect Your Taxes?

The manner in which you are taxed will be contingent upon the legal form of your company. Tax and responsibility duties are distinct for many business structures, including sole proprietorships, partnerships, limited liability companies (LLCs), S corporations, and C corporations, as well as nonprofit organisations. Each structure has its own set of advantages and disadvantages. Get in touch with your company's accountant and/or legal counsel in order to find out what kind of organisational structure will work best for your company. Think about the needs of your company right now and in the future.