Individuals and businesses are liable to pay taxes on their income once certain thresholds are met. Through practical tax advice and planning, you can generally ensure you pay your fair share of taxes and are not overpaying. Here are some key benefits of having a tax professional to review and assist with your tax planning and advice.
Awareness of Potential Tax Liabilities
Many people know income tax but have yet to learn how much tax they should pay. Some people file their tax returns by themselves and use ATO’s available information. Although most of the information is accurate with the tax office, it’s better to double-check with your records as the ATO doesn’t hold all your tax data, especially your deductible expenditures.
Having a tax advisor to review your overall taxable income and potential deductions is a good starting point. The tax advisor can also assist with making you aware of the potential tax liabilities, especially for someone or business owners having income from different sources other than salaries and wages.
Tax Payments & Tax Budgeting
Taxes are part of everyone’s life and should not be ignored. Paying taxes can assist our nation as our government needs the funds to build infrastructure, create job opportunities and help people in vulnerable situations.
Some people lack tax knowledge and don’t include it in their financial budgeting. A tax advisor can help you understand the timing of tax payments and let you know the estimated tax should be set aside to meet upcoming tax payments.
A tax advisor can assist you even if you already have a tax debt with the ATO. Some people may think it’s too hard as they are already behind the tax payments and do nothing about it. This doesn’t solve the problem and keeps the issues going and eventually getting out of control. A tax advisor can work with you to map out a plan to gradually pay back outstanding taxes and negotiate with the ATO to set up a reasonable repayment plan.
Understanding taxes and having a tax budgeting can undoubtedly help you manage your financial affairs. With assistance and education from a tax advisor, people tend to know about income tax and will have a sound system or plan to ensure future tax payments are met.
Review Strategies To Minimise Tax Payables Through Within Legal Parameters
Your tax-saving strategies may not be as effective and correct as you thought. Some people do their research and tax analysis to save professional fees. It is understandable, provided that you know what you are doing. The old saying is that you should let professionals do what they are good at, and you should focus on your expertise. This could also save you any potentially costly mistakes.
You should always consult a tax advisor should you have any doubts. A good tax advisor will review your circumstances and assist you in understanding the allowable deductions and ways to save taxes. They will also explain these strategies to you and discuss any substantiation requirements. You can then collect all relevant information or maintain any required documentation.
Execute The Plan & Continuous Review
A good plan without proper execution is wasting of time. Once a plan is prepared, it is essential to execute it and ensure each step is followed. If you encounter any issues or unexpected problems and cannot follow the plan, you should contact your advisor and adjust the plan accordingly.
A review timeline should be set to ensure that what’s planned is still correct and achievable. It is vital to review your situation with the plan continuously. It is okay to self-review the plan as long as you are confident that everything is on track.
Gauge Your Business Targets And Analyse Your Success Through Profit Assessments
A successful business often reviews its performance and compares it with pre-determined targets. Businesses tend to use different kinds of key performance indicators; these can be part of considering internal and external factors. Internal means the performance within the organisation, such as gross profit margin, the number of days on average to collect payments from customers etc. These can be compared with the same ratio with historical information and see whether there are any improvements in the business.
In addition to the above internal comparison, businesses should also compare with external parties (i.e. competitors or industry benchmarks). You can see your position within the same industry, which often creates some further thoughts for business owners to see how they can improve their business or whether there are any deficiencies within the organisation.
Profit is the key for a business to survive and grow. Once the analysis is performed, the bottom line and key one is the net profit for the business. If the assessment turns positive and you are improving year after year. You can continue the same process to grow your business further. If not, you should review your current process well, involve your critical management team if required, and adjust the process as early as possible so you can eventually achieve your target.
Plan For The Current And Upcoming Year Ahead of Time
Depending on your circumstance, tax planning and advice may be simpler than you thought. It usually takes a fair bit of time to begin with. Once the basic plan is set up, it can assist your business operation planning and your personal financial goals.
It is also essential to consider and take into account different types of taxes, if appropriate, such as land tax, payroll tax, income tax, and GST, to name a few. If these are not factored in, it could affect your business operations and create cash flow issues; for example, purchasing not urgently needed machinery by using the funds for tax-related payments can damage the cash flow position.
A good tax plan is vital to plan not only for the current but also for the future. A tax advisor can undoubtedly assist you or help you to improve the self-created plans further.
Why Choose Professional Tax Accountants?
Professional tax accountants analyse your financial position and come up with strategies that enable you to minimise your tax. This is why it is essential to let the experts do the job while you focus on your business.
Get in touch with professional tax accountants here at IJ&EA and allow us to manage your accounting in the most efficient manner possible.