5 ways business owners can plan for a better tax time
It may seem like it was only just tax time, but before we know it, it’ll be here again. Below are a few simple, smart and legit end-of-year tax planning activities that business owners should consider to help reduce their tax bill.
Preparation is the key. Speak to your accountant early to determine what you need to prepare in order to make your year-end activities as seamless as possible, and to ensure you get any eligible refund sooner. It also means you can stay focused on the important stuff.
1. Speak to your accountant before June 30
To get the best tax outcome, business owners should schedule a tax planning meeting with your accountant around April/May to give you enough time to make the necessary changes in your business. Ask them if you’re eligible for any concessions or rebates, such as the $30,000 instant asset write-off.
Flag this in your calendar, or set up that appointment for 2020 now.
2. Check your year-to-date numbers
One of the many benefits of online accounting software is that you no longer have to wait for your accountant to tell you how you’re performing – you can monitor your key metrics anywhere, any time, on any device, so you have a real-time understanding of where you’re at. I encourage you to review your numbers regularly throughout the year – ideally with your accountant or business adviser – so you can determine whether you need to take action to correct (or compound) performance for the remainder of the year to achieve your targets.
Effective budgeting isn’t set-and-forget; it’s an ongoing process. If your budget runs along a financial year (which I recommend), you should be reviewing your performance to date, and start thinking about next year. I recommend creating next financial year’s budget in the weeks after the start of the new financial year; so the better you can understand this year’s performance, and why you deviated, the better-placed you’ll be for creating an even better budget for next year. Make sure you use bottom-up budgeting, where you work backwards from your desired profit figure.
4. Check your KPIs
It’s a good time to revisit your business performance, which for most businesses is measured by KPIs. Note: while your financial KPIs are obviously important – every owner should regularly monitor your income, expenses and profits as a bare minimum – your financials are only an indicator of overall business performance. The true drivers of business performance are the non-financial areas that every business needs to get right: your people, your processes and your customers. If you can nail these, your financials will largely look after themselves.
5. Sharpen the saw
It’s easy for owners to get swamped by all the stuff that needs doing. You need to make time to step back and assess how your business can operate more effectively with less time and effort – to ‘sharpen the saw’ as Stephen Covey puts it.
My business partners and I take it a step further and hold an offsite strategy session. This helps us objectively analyse your business and focus on the challenges and opportunities ahead without the daily noise clouding our judgement or limiting our thinking. Make it the same time each year so it becomes part of your normal business process.
Columnist Jason Cunningham is a business growth expert, author, keynote speaker and industry commentator, and owns his own successful financial practice.
Get Jason’s book at www.jasoncunningham.com.au/book