Tax time can be overwhelming for many Australian business owners. The fear of making errors and going through the tax consequences from the ATO can affect a business. However, with proper preparation and tax planning, small business owners can find it easy to navigate tax season and reduce their tax liabilities.
Effective small business tax planning factors include taking proactive steps to minimise tax liability and optimise tax benefits. In this blog post, we’ll explore crucial steps that businesses should take to prepare for tax season. To stay ahead of tax season, it’s essential to plan your finances accurately to keep up to date.
How Do You Achieve Better Tax Results?
Before you start making a financial plan to achieve better tax results, it’s crucial to understand your company’s tax return obligations and business objectives. Different business structures need to meet different tax requirements. For instance, a sole trader needs to meet different tax obligations, and a company needs to meet different tax requirements. We are among the top accounting firms in Melbourne, specialising in offering accounting solutions to help our clients meet tax obligations.
Ensure you understand the complexities of tax laws that apply differently to sole traders and companies. We have listed a few ways to prepare for the tax season:
- Plan your cash flow effectively
Many business owners face cash flow ups and downs as they pay their employees and collect payments. Large tax bills can affect their cash flow, putting the burden on household and business finances. By planning out your cash flow and predicting your tax deadlines, you can focus more on critical aspects of your company.
- Keep accurate records
Another important thing is to keep your business records updated and accurate. There is nothing worse than getting to tax time and having messy records. This means keeping accurate records is crucial so your accountant can prepare and lodge tax returns on your behalf without paying penalties for late lodgment or wrong lodgment. For accurate records, you can get help from a small business bookkeeper. They will keep track of all financial transactions and record them accurately, which are later used by a tax accountant.
- Review your business expenses
It’s essential to review your business expenses, so you can address possible tax deductions that may have been overlooked. This includes expenses related to running the business, such as rent, office supplies, advertising costs and utilities. By conducting reviews frequently, businesses can ensure that they are claiming potential tax deductions that they are eligible for and optimising their tax position.
- Track accounts receivable and payable
Keeping track of accounts payable and receivable is essential for cash flow management. Businesses must actively manage their account receivable to ensure timely payment from their clients, minimising the risk of cash flow disruptions. In the same way, businesses must know how to manage their account payable to optimise payment timing. By staying on top of accounts payable and receivable, businesses can maintain cash flow and reduce the risk of cash flow gaps.
- Meet tax deadlines
Staying informed about crucial tax deadlines is important. The ATO offers resources and tools to help you understand tax obligations and meet compliance requirements. You must be aware of key dates to avoid late lodgment penalties and interest charges. As a result, it will ensure a positive relationship with the Australian Taxation Office and effective tax planning for your business.
Is it worth seeking professional advice for better tax results?
While businesses can opt for different ways to increase deductions on their own, getting help from the best accountant in Melbourne can provide valuable insights and guidance, so you can achieve better tax outcomes. Tax accountants can help companies navigate complex tax laws and spot potential tax deductions specific to their circumstances or industry. By getting help from a professional tax accountant, businesses can ensure that they are taking advantage of all available deductions to reduce their tax liability.
Conclusion
As a business owner, you must handle numerous business tasks, including tax matters. However, if you find it difficult to deal with tax matters, it would be better to reach out to Reliable Melbourne Accountants, so you can focus on your business.