Is it just us, or does each year go by quicker? Before we know it, we’ll be entering a new financial year and starting to work towards new goals; whether it’s on a business or personal level.
Where would you like your business to be 12 months from now?
Are you after some extra cash flow to support your investments?
Perhaps you need to budget for a planned family holiday?
Now is the time to reassess your current financial position and start tax planning for the year ahead. By starting this process in April or May, you can springboard into the new year with your goal-supporting affairs in order – rather than scrambling to pull it all together when the clock strikes midnight on 30 June – and potentially missing out on valuable tax savings!
And who doesn’t want to sail smoothly towards the end of financial year in a tax-efficient and stress-free state of mind?
If you’re using XERO, the tax planning process for your business is straightforward. Your first task is to ensure you have a clean and fully reconciled set of books at least to 31 March. From there you can project towards the end of the year to assess your tax position, thereafter integrating your personal situation also, and applying practical tax saving strategies.
Feel free to contact us if you need assistance with your tax plan!
5 Reasons why early tax planning is important
Putting aside the time to reflect on your current position months out from the end of financial year might seem like a burden, but trust us – in the long run you’ll be glad you did!
Early tax planning allows you to:
- Identify strategies that can be applied to save tax, and therefore enhance your wealth position;
- Understand if your current business structure is suited to your financial goals and is actually tax effective;
- Make informed decisions on how to distribute your net income tax effectively and improve your cash flow;
- Determine whether you should buy, sell, or hold onto specific investments into the future.
- Review your entire family position from a wealth and tax efficiency perspective.
Tax Planning for Business
Tax minimisation is a topic that is particularly high on the priority list for Small to Medium Size Businesses (SME’s). It’s often this area that brings our clients to us in the first place.
As a business owner, paying more tax is a direct result of earning more profit – and that is ultimately a good thing! At Minnik, it is our mission to direct our clients towards wealth, implementing tax strategies along the way to ensure their tax position is consistently minimised. And it all starts with a good tax plan!
Here are 5 tips to prepare your business for an accurate tax plan:
- Organise your records. Ensure your XERO file is up to date and banks and loan accounts are accurately reconciled.
- Compare your financial records in XERO to the prior year to identify any potentially missing income or deductions. Make corrections accordingly.
- Review your asset purchases (as opposed to repairs expenditure) and code them as required to fixed assets.
- Review your payroll and superannuation records. Process corrections if required.
- Review your accounts receivable and payable records. Process corrections if required.
If you’re having any difficulty in any of these areas, feel free to contact us.
Tax Planning for Individuals
Now that your business tax planning is complete, it’s time to review things on a personal level. It is important that you consider your family unit as a whole when planning for year end, not just your business.
Here are 5 tips to prepare for personal tax planning:
- Provide your accountant with details of any change of circumstances that may be crucial to the planning process, such as additional income streams or family matters.
- Review and reconcile your Household XERO file. Alternatively if you don’t yet have one, you can begin to collate relevant records of your personal income and associated expenses.
- Assess the performance of your investments in relation to their term of holding and the current and projected market.
- Consider your superannuation profile to determine if this is a suitable avenue for current year tax savings, or whether you need to look into other options.
- Meet with your Accountant to arrange preparation of your annual plan and subsequent discussion meeting.
How did you go? Now that your tax plan is complete, you can kick back and sail through the next couple of months, dedicated to the tax saving strategies you now have in place, and knowing that you’re in the best possible tax position.
And remember to set yourself a reminder to do it all again in April or May next year!
If you have any questions about tax planning, feel free to contact us.