Published on Jun 7, 2016
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It’s less than a month until the end of the financial year – time to start thinking about getting your tax affairs in order. We had a chat with James Carr, Director of Keirs Carr Chartered Accountants about what businesses can do to be prepared and get the most out of tax time this year.
Q. What are your three top tips for businesses to be ready for tax time?
- Maintain current and accurate records. Businesses can be best prepared for tax time by being able to look at their business’ performance well before the end of the financial year, so they can make prudent tax planning decisions. Good business accounting systems make record keeping simple and produce reliable information for management.
- Have a tax plan. The end of the financial year is a great time to review your business performance and implement strategies to manage your tax obligations. Give yourself enough time to implement that plan. Schedule time to review performance with your staff/management, and speak with your advisors about strategies.
- Consider cash flow. In business, particularly small business, positive cash flow is critical. Tax planning strategies can place a strain on cash flow. Know your cash flow, and only implement strategies that do not place too great a strain on your business cash flow. Good accounting systems can assist you in forecasting your business cash flow.
Q. What are the biggest mistakes you see clients make when it comes to dealing with tax affairs?
We all have different strengths and weaknesses as business owners, however there are two common pieces of advice.
- Keep the ATO happy. The worst thing a business can do is fail to keep on top of their compliance obligations. When cash flow is tight, business owners may feel like deferring an activity statement or a tax return, to give them more time to find the money. This is a mistake. Falling behind on lodgement obligations paints a target on your back. The ATO start calling, fines are levied and things can snowball. The best advice is to keep up to date. The ATO are actually quite reasonable when it comes to making arrangements to pay off debts, so long as the business has a clean record and up to date lodgements.
- Ask before you act. There are so many intricacies in tax. Often an action in business can have an unintended consequence. As business advisors we are best placed to provide assistance before an event. Once something is done, it’s done.
Q. Do you find businesses have a good understanding of the different concessions and deductions available to them?
Yes, generally business owners have a great broad understanding, but might not be quite up on all of the specifics. We often hear snippets in headlines or when talking with friends and colleagues, but more often than not the finer detail is not understood. The best advice, again, is to take advice. We spend countless hours in professional development training to stay up to date and current with the rules as they change.
Q. What is the benefit of seeking professional tax advice as opposed to trying to do it yourself?
The benefit of professional advice is just that – professional advice. We are experts in our field, just as our business clients are experts in theirs. We know the detail and how to get it right. More than that though, accountants are not just about compliance. We are part of your business’ management team. We partner with your business to assist them in whatever stage of business you are in – from starting out to growing your business to selling and succession planning.
Find out more
Keirs Carr Chartered Accounts is our Business of the Week! Check out our profile to learn more about this great local business.
Visit the ATO website for more details about tax.
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