New businesses and start-ups need to be aware of tax planning. Strategic tax planning is not only relevant, but can make a big difference to the bottom line of any business. In this post, we will talk about five essential tips that will help small businesses in getting better tax benefits.
- Plan things from the start. When it comes to tax planning and accounting, you cannot rely on your consultants and accountants for last minute work. It is important to keep things on track from the start. Prepare early, at least two months before the end of the financial year. This will help with deductions, and the tax preparation team will offer the required assistance that’s needed to complete the due formalities.
- Keep all documentation organised for tax preparation. It almost goes without saying, but you may be surprised how many small businesses know they need to keep it managed but haven’t actually done so. If your cash flow can accommodate hiring a bookkeeper, or at the very least, set up accounting software that will automatically sync with your business account, then either of these would be worth considering, as they can save you from a big headache come tax time.
- Time your purchases. One of the best tax time tips is related to purchases. If you are an Australian business, you should ideally time your purchases in May or June, so that you can get the right kind of benefits in the current financial year. There’s no point in delaying work related expenses until July because you have to wait for a year before you can get any tax benefit.
- Understand the tax structure in your country and try to decode the different taxes, like the excise tax, income tax, and employment tax. Your business structure largely determines the kind of tax you would pay.
- Hire a consultant at the earliest. Tax specialists can help in understanding most of the complicated norms, rules, and regulations, and you should hire a service at the start of the financial year. You can get back to them, as and when you need assistance for advice around expenses, financial investments, and so on.
Choosing a tax service
First things first, choose a tax and accounting service that has worked with businesses similar to yours. Since most services have websites, you can find relevant details there. Take a moment to check the work and services they offer, don’t assume all accounting firms are the same. Some focus on speed, getting through as many returns as they can efficiently, while others get into the nitty gritty (tax planning) and help you plan for the long haul. While the former may be a cheaper service, it may not be the best to help you build your long term success.
Secondly, check the reviews online. A good company will never shy away from sharing customer references. Many clients and businesses post reviews of tax services online, which can be useful in comparing services.
To help sort out the most appropriate firm for your needs, you can ask a few relevant questions: For example – Are you available all through the year? Who are your regular clients? What kind of additional tax assistance can you offer? It is also important to check if they are available for consultancy needs, especially when it comes to big financial decisions and investments. If you can make enquiries along these lines, and this helps you find the right specialists for your needs, preparing taxes and managing your businesses finances shouldn’t be a hard job, at all.
Make sure that you consider your financial objectives before you talk to tax consultants, and if you have future investment plans, be upfront about them, as they may be able to advise you in your decision making so that you can get the best tax benefits and you can get to where you want to go sooner.