Tax, numbers & accounting, in general, can be an absolute minefield, believe us! That being said, there are simple steps that you can take to make your life an awful lot easier. In this post, we’re going to explore 10 valuable tax tips for SMEs, so that you can streamline the books and ultimately alleviate some of the pressure.
1 – Structure is Everything
Establishing the appropriate business structure which accurately reflects your circumstances is vital when taking care of your accounts. But it goes much deeper than that; a business without structure is quite simply destined to fail.
2 – Time Keeping & Synchronicity (Invoicing)
GST and income tax are largely affected by your punctuality when it comes to invoicing. Ideally, the invoice should have been issued within 30 days of receiving payment. When it needs doing, do it.
3 – Time Keeping & Synchronicity (Tax Deductibles)
The very same applies for your tax-deductible payments; your income tax and GST are very much affected by your timing. Don’t leave everything to the last minute, – if you want to minimise your losses, maximise your efficiency.
4 – Salaries & Wages
Another one for timing and efficiency; (something that plays a huge role in accounting) pay your wages & salaries on time. Juggling the variables in this area affects income tax, pay as you go, superannuation guarantee payments and payroll tax. For example, by missing a payment you’ll likely have to pay an SG charge, which can easily be avoided.
5 – Superannuation Payments
Make your superannuation charges on time and to the right fund! Contributions and transition to retirement provides a unique opportunity for tax deductions and of course, effective saving.
6 – Inventory & Stock Control
You need to know which products the real breadwinners are. Identifying and understanding which lines of stock can create the most value is paramount for your future success. Just be aware that the method you use to value your stock will have an effect on your tax outcomes as well.
7 – Know Your Balance Sheet Inside-Out
Study your balance sheet and review it well! With some careful consideration, you’ll be able to easily identify areas in which tax benefits are available to you.
8 – Property, Plant & Equipment
Your business plan should include everything related to property, plant & equipment, when they were purchased and how it reflects on the invariable depreciation of certain items over time. Whether bought outright or financed, it all has an effect on your tax and GST.
9 – Business Owners and Remuneration
If you’re a business owner, be mindful of the manner in which you pay yourself, sort your allowances, cars, loans, dividends and so on. Everything that you do is going to affect the amount of tax paid. Obviously, as a business owner, you are entitled to your slice of the pie but remember that there are ways of reducing the overall tax paid if you optimise the way that you reward yourself.
10 – Capital Gains / Losses
When it comes to your assets, holding them in the appropriate business structure, the timing of disposal and the application of tax laws are invariably going to have a significant effect on the amount of tax that you’ll be liable to pay. Simply put, get your house in order, optimise your assets well and you’ll be able to successfully reduce your outgoings.
We certainly hope that this was helpful, though of course, we completely understand if you’re now left with yet even more questions than before! Ultimately, there’s an awful lot for you to bear in mind when it comes to bookkeeping, which isn’t always possible when you’re trying to run a business and you have a million and one other things to be worrying about!
Naturally, there are many things that you can do personally to streamline your bookkeeping and reduce your overall tax payments, though of course, the most valuable commodity of all (in both business and in life) is time. So, if we can save you both time and money, – well, it might be worth booking your FREE consultation.