The average business doesn’t pay much attention to tax planning, which means that they’re probably paying a lot more taxes than they should be. You’re potentially losing out on a lot of money that you can utilise for your business or personal use.
Tax planning and preparation are essential services that every business should opt for. Businesses can acquire outsourced tax accountants, CFOs, and tax preparers to help them in this regard. Here’s all you need to know about tax planning and the various ways you can legally avoid paying more than your fair share of taxes:
Tax Planning Explained
Tax planning involves a variety of methods by which companies and individuals can reduce the amount of taxes they pay. These are entirely legal means and utilise different loopholes in the legal system as well as different incentives provided by the financial authorities to apply for deductions on their taxable incomes.
Different businesses have different leverages, with small businesses having more options to help them develop and capture the market, giving them an incentive.
Paying for Repairs and Maintenance
As you use up some of the commodities that you’ve purchased for your business, they’ll inevitably go through some wear and tear. You can get some tax deductions to buy getting these items repaired. You must get these repaired and make the payment for those items within the fiscal year for them to deduct your taxable income.
Make sure that you don’t mix these up with your Capital Improvements, which are subject to assets and generally require depreciation.
Paying for Future Expenses
Small and medium-sized businesses commonly take this approach when they’re working with financial experts, as they pay for their business expenses in advance. Companies are allowed to pay for any expenses in the following business year in the current one, and they can receive taxable income deductions for the current one. You can pay for a wide variety of services and commodities that you acquire.
This isn’t a recommended approach for businesses that expect their numbers to rise in the following years as they might end up paying more than they should.
Property Depreciation Report
This one’s limited to small business owners, but it’s an excellent incentive provided by the authorities to help businesses prosper. Even as your rental property depreciates, you can claim write-off deductions on these properties. All you have to do is file the Property Depreciation Report if you’re eligible for it.
In need of an accountant to help you legally minimise some of your taxes? Consider working with our experts at Newmarket Accounts. You can acquire our tax planning and bookkeeping services for small business and part-time CFOs in Melbourne, Darwin, Sydney, Hobart, Brisbane, Canberra, and more.
We provide a complete suite of services, including regular reporting, professional tax compliance, tax filing, and planning. Reach out to us to take your company to the next level.