Tax planning are two words that get no one excited. But do you know what’s even less exciting? A big tax bill. Four more words dreaded by every single business owner. It’s time to change that deal-with-it-last-minute mindset and begin to think of tax planning as a year round necessity. Being smart with your money is an absolute key to business longevity and being organised on this front will ensure you have the smallest tax bill possible. We’ve put together a few points to make the process less painful and more achievable:
- All those tax deductions need to be recorded, whether you’re sticking to old school receipts or stepping into 2017 with Xero, which keeps the records for you. If you think an item is deductible but you’re unsure, include it anyway. Let us decide whether it’s valid or not.
- Time for some quick calculations. If you salary sacrifice and contribute an extra 5.5% into your superannuation each year, look at the enormous difference it’ll make in the long run. Take a $72k salary for example. You’ve got 9.5% going into super already. Let’s ramp that up to 15%. Assuming growth rate is 8% and inflation is 2%, you’ll have $569,073 extra in your super by the time you’re 67. You’ll also get taxed less on that money. It’s a no brainer.
- Don’t palm off the motor vehicle claim by doing the standard 5000km. Find the time to do a logbook for 12 weeks and claim everything you’re entitled to.
- Working from home has become common practice. So many people have no idea of what to claim in this situation. Mobile phone, internet and computer are just a few items that you should be aware of.
- If you’ve shoved all things tax to the side until now, think about expenses you could pay ASAP, before June 30th. Income insurance, memberships, union feeds. Anything deductible that your cashflow allows for. On the flip side, see if you can defer that bonus from the boss until July.
By following a few easy tips, tax time should become less stressful and more efficient. Start getting into year round habits and stop leaving it till June. Your wallet will thank you later!