Top reasons why Tax Planning is important for Small Businesses in Australia

February 8, 2021
Tax Planning is important

Every business wants to attain the top position in the competitive world. With the growth in technology, it is much more suitable for increasing the marketing attributes of the business. To support the financial business goals, tax planning is important for Small Businesses. Tax is normally quite tricky, so it is necessary to understand all the abilities. In the modern-day, we could come across various types of taxes that include property tax, GST, and many others. Contact Clear Tax as your Tax accountant in Richmond to help you with your tax planning.

What Is Tax Planning?

Tax Planning is mainly an activity taken for minimizing the Tax Liability and ensuring the allowance, exclusions, deductions, as well as exemptions, works together in a more tax-efficient way for reducing the Tax bill. The Tax Liability is normally an amount owed to the tax authority. Corporate tax planning involves reducing the tax liabilities for the registered company. That is why tax planning is important for small businesses. Most of the corporate take deductions on the following:

● Business Transport
● Health Insurance of Employees
● Retirement Planning
● Office Expenses
● Child Care
● Charitable Contributions

When a business has higher profit, it leads to higher Tax Liabilities. It is imperative to devote more time to thorough Tax planning for reducing tax liabilities. Making appropriate tax planning would be a suitable option for reducing the burden of Direct Tax and Indirect Tax on businesses. These are mainly reduced during times of inflation. Clear Tax accountants can help you with your Business Tax Return in Melbourne.

Importance of Business Tax Planning:

Tax planning is important for small businesses helping the business to easily achieve the business and financial goal. With making the appropriate tax planning, it is a more efficient option for attaining major benefits that include

● Reducing Tax Rate
● Maximizing Tax Relief
● Lowering amount of Taxable income

Proper Tax Planning for small businesses mainly involves analyzing the expenses, capital sales, capital budget, as well as marketing costs. Businesses need to make appropriate tax planning based on the new or updated laws and allowances. Good tax planning results with

● Disclosing exact information to the IT departments
● Planning with business objectives
● Flexible planning to incorporate changes in the future
● Legal tax planning based on the purview of law
● Tax Planning based on the Tax Laws and Court Judgments

Types of Business Tax Planning Strategies:

Tax Planning is important for small businesses in Australia. Below are some of the most important areas where Clear Tax accountants as your Tax Accountant in Richmond can help you to save tax and can help you file your Business Tax Return in Melbourne:

  • Capital Gains Tax: Planning for Capital Gain Tax is required to have a greater number of things to be considered. Some of the factors such as what are products sold, whom they are sold to, etc. Choosing professional Tax planners is helpful for making appropriate calculations about tax planning.
  • Corporate Tax: Corporate Tax is the large cost for a profitable business. Some of the most important strategies involved in Tax planning are
    • Capital allowances
    • Deferring income or profits
    • International tax
    • Reducing the forward costs


Reasons to opt Tax Planning for Small Businesses in Australia:

Tax planning is important for small businesses as it brings greater benefits. The strategy involves a complete evaluation of the current financial situation of the business and estimating the profit or loss in the next quarter. These are suitable for drawing the best strategies to minimize tax as well as the maximizing value of your small business. With making the appropriate tax planning, it is quite a convenient option to organize everything as well as get better financial awareness. When you are not making the appropriate tax planning, it is more likely to mess up with the tax returns by forgetting to avail of the exemptions or refunds.

Most small businesses face a lot of problems during filing Business Tax Return in Melbourne, so it is important to hire Clear Tax as your Tax Accountant in Richmond to help you understand why Tax planning is important for small businesses and prepare a perfect Tax Planning strategy for your business. When your organization does not have appropriate planning for the Tax filing then it could be difficult for gaining the benefits.

Updating the tax policies before June 30 is most important for the business. Below are some of the most important reasons for making secure planning for your tax.

1. Save Tax:

The main objective of Tax Planning is to completely reduce the amount of Tax for your business by maximizing the deductions and exemptions. Based on the Taxation guidelines by the government, the small businesses are eligible for getting instant asset write-offs for assets up to $30,000 ($150000 for assets installed or used between 12th March 2020 until 30 June 2021 and purchased by 31 December 2020). Normally, the company could easily get a complete deduction against the yearly profits. It would be quite an efficient option for saving your tax.

For this process, there are also some of the prerequisites required to be followed for using the asset. Small businesses also need to be operational with a GST number. Normally, when the asset is worth $30,000, you can easily avail a deduction of 27.5%. This would not be covering the value of the asset. Choosing the capital purchases would be easier for availing the complete deduction.

2. Well Organized Financial Data:

Making the complete Tax Planning for filing the taxes is an excellent way for abiding by the Laws of the Government. Keeping the financial records updated and well organized is most important for the business all throughout the year. Normally, there are 2 different ways for achieving this process that includes

⮚ Cloud Accounting: Cloud Accounting is normally the online data system for calculating and recording the financial expense, gains, incomes, losses, and everything. Businesses can easily store all the files online for keeping the financial transaction secured without any hassle. Cloud accounting becomes one of the significant options for easily searching the better transactions as well as preventing any kind of displacement of receipts.

⮚ Digital File Sharing: One of the best ways for easily streaming financial reporting with keeping everything organized is with the help of digital file-sharing. It is mainly enabled with the complete Dropbox files which are enabled with the reporting and accounting arranged in the sequence. It is a much easier option to share Google Excel files with an accountant as well as keeps the recording transaction much more efficient.

3. Make A Head Start:

Using Tax Planning, it is suitable for your small business to easily make a close estimate of the distribution minutes. Planning of time would be quite an efficient option for extensively saving more time as well as the need for rushing to make a quick decision. Whether you are a startup or a well-established business, it is quite a convenient option for making a head start with following the appropriate tax planning. Making suitable tax auditing with the help of professional accounts, it is easier for following the tax based on the data.

4. Tax Deductions:

Whether you are a small or large business, you can easily get the best Tax benefits every year when you are making appropriate Tax planning. There is a wide list of Tax Deductions that your business could be eligible for. Some of the tax Deductions benefits are:

✔ Deductions can also be claimed on the Expenses on the business vehicles
✔ Deductions can also be claimed on the Thefts and insurances
✔ Deductions can also be claimed on the Business-related travel expenses
✔ Depreciating assets that include the plant, buildings, machinery, and more
✔ Work from home claims (eligible if operated from a home office)
✔ Replacement, Repair, as well as maintenance of machinery parts and equipment
✔ Hiring accountants, bookkeepers, as well as other professionals for tax management
✔ Employee salary payments, superannuation contributions, and fringe benefits
✔ Cryptocurrency is deductible for post tough surveillance
✔ Sponsorship and Advertising to hire staff, promote products, as well as sell trading stock
✔ For the itemized bill and business calls

5. Refrain Company’s Capital:

When the shareholder borrows the money from the private company then the complete share is deemed for the rules of the dividend. It would be framed as taxable dividends. When you are not making the repayment before the end of the tax year then they are treated for the income. When the business assets are used for personal use compared to the lower market value then they are subjected to the deemed dividend rules. Assets are transferred to shareholders based on the capital dividends so that they could be used for the repayment against the loans that are given by the shareholders.

6. Get Confident:

Working with the best process of Tax planning mainly allows the business owners to easily increase knowledge of compliances. These are also a suitable option for learning more about the strategies as well as quicker for minimizing the taxes. It would be a suitable option for providing the complete management of the business. With making the appropriate tax planning for your small business, it is a more efficient option for making quick decision making from the stable, firm, and factual base.

7. Based on Budget Changes:

Updated and applicable federal Budget is mainly taken into consideration. So, the business accountants are required to have complete tax knowledge even up to date. It would also extensively ensure the business can achieve more possibilities for the tax outcome. This would also be a suitable option for gaining more advantage from the incentive schemes.

8. Changes in CGT (Capital Gain Tax):

When your business is not entitled to capital gains tax discount then you are required to pay tax at the applicable rates on net capital gains. Discount Method allows reduction of capital gains by 50% for resident individuals (including partners in partnerships), trusts, and 33.33% for complying super funds. When the business sells the active capital asset such as the business buildings or the trade, then the government also allows them for an additional deduction of 50% (In addition to a 50% discount). For claiming these deductions or discounts, a small business is required to satisfy various conditions or tests such as the $6 million net asset value test.

9. More to Invest:

With getting more knowledge about the Tax Liabilities, it is a much more efficient option for reinvesting the funds. These are mainly earmarked for getting the tax back for the business. Choosing professionals from Clear Tax accountants to help you with Business Tax Return in Melbourne would be quite an efficient option to cater to all your business taxation requirements by making appropriate tax planning. Complete services are suitable for your business to save your time and make the right investment. Professional services range from Accounting & Tax, Self-Managed Super Fund, or even setting up a Company for attaining the complete growth of the business. It is a much more suitable option for making quick tax planning for the small business to the extent.