Groundswell May 2021

What is tax planning and how can it save you money

By Paul Cunningham, Associate, SMART Business Solutions

When an accountant talks about tax planning, what do they actually mean? As part of our tax advisory service, we always offer strategic tax advisory, but it’s important to note there are a lot of things that accountants cannot implement after June 30.

In an ideal world, taxes would consume very little of our time and attention. The reality is income tax is one of the largest expenses for most businesses and individuals. There is nothing worse than reaching the end of the financial year and having no visibility into how much tax you’ll owe. It requires careful planning, budgeting and monitoring to avoid keeping business owners up at night. As one of the Associates at award-winning SMART Business Solutions, Paul Cunningham is skilled at guiding his clients toward the most tax effective structures to ensure business strength is at the forefront.

“If you want the most strategic tax outcome, tax planning will give you clear insight on what you can do or action before June 30 to provide a better tax outcome. With the 2021 Financial Year in its final quarter, we encourage you to consider discussing a Tax Planning strategy with us or your current accountant.” says Paul.

Fortunately, it’s possible to manage your taxes and gain control over their effect on your finances. When your taxes are fully understood and anticipated, you can regain control over cash flow, debt repayments and other obligations.

Tax planning is an exciting opportunity to unpack and rearrange your business structure, looking to implement tactical ways to distribute your funds and potentially action any changes in your current structure pre-year-end such as paying a wage, making superannuation contributions, pre-paying certain expenses or considering investing in business equipment.

With smart tax planning, you’ll have the opportunity to plan better and implement actions to guide your final months of the financial year to operate in your favour, working toward minimising your tax and retaining more profits.

The overall goal of Tax Planning is to employ a strategic approach to your overall tax obligations with the intention to keep your effective tax rate as low as possible, ensuring you hang onto your profits.

April or May is the best time to do Tax Planning. This ensures your accountant has time to consider your business and your individual requirements and offer advisory on what actions you could take to assist with the overall goal of minimizing your effective tax rate come June 30.

Benefits of Tax Planning

Tax planning is critical for businesses and individuals who want to take control of their finances and position themselves for success. With a well-considered tax planning structure you can expect to achieve:

> Improved cash flow

> Better reporting

> Improved goal setting and tracking

> More control over your money

> Improved decision-making

Your tax planning process doesn’t need to be complicated, but it should be thoughtful, never reactive. Working with your accountant you can evaluate your current tax strategy and find ways to optimise your tax situation further.

More information

SMART Business Solutions are big advocates on sharing their knowledge. Take a look at their website where you’ll find a stack of resources including videos, downloadable files and up-to-date articles all geared to help business owners achieve better business.

www.smartbusinesssolutions.com.au