The Importance of Tax Planning

Written by James Ginty
June 7, 2022

As a business owner, you know one thing is certain at the end of every financial year. Tax! And we’re pretty sure you’ve already heard many accountants and specialists telling you to start tax planning now. But why is tax planning so important?

James Ginty, Partner at Elements Advisory Group explains why tax planning is so important, the benefits for businesses, and the approach Elements Advisory Group takes to proactively plan to enable more confident business decisions throughout the financial year. Watch the full video below.

 

These days, more and more business owners are seeing the value of tax planning for a pretty simple reason. Proactive planning is key to helping minimise your tax liability! It gives you clarity and it ensures you know what you’re in for well in advance of any income tax liabilities arising.

But we’re not just talking about saving tax at the end of the financial year. It is just as vital for when you decide it’s time to exit your business.

For example, if you’re looking to sell your business in the future, you want to ensure you’re in the correct structure for a particular sale to maximise tax effectiveness. It all comes down to proactive planning and knowing what you’re in for when that time comes.

Manage your cash flow

Poor planning significantly impacts cash flow when ‘surprise’ bills arrive.

With proper planning, you’ll be able to set aside cash for tax and ease your compliance burden at the end of the financial year. By knowing your tax obligations, you will be better equipped to manage cash flow, assess working capital requirements and make better strategic business decisions throughout the financial year.

Utilise tax-saving strategies

Planning ahead helps you identify and understand tax-saving strategies early. Especially with all the recent budget changes, it’s important to start planning now and consider all the changes that may affect you before 30 June rolls around.

This gives you ample time to adjust your strategies if needed and ensure that you are utilising and maximising all tax-effective strategies available to you.

It’s important for any business owner to be well-informed before making any strategic business decisions. Unfortunately, a lack of education and proactive advice sees many business owners triggering unfavourable tax outcomes which often go undetected until well into the next financial year.

That’s why at Elements Advisory Group, we take a proactive approach to tax planning.  We meet with you on a quarterly basis to catch anything that may materially impact, not only your income tax obligations for the current year but also the future plans for you and the business.

For example, the timing and application of certain small business capital gains tax concessions can have a significant impact on a small business owner’s retirement. By being aware of these concessions, actively planning and making the required changes within your business, small business owners can maximise value and take advantage of these tax concessions before it’s too late.

The best time to start tax planning is now

Effective tax planning is vital to easing stress, managing cash flow and enabling more confident business decisions throughout the financial year.

Whether you’re looking into tax planning to prepare yourself for the next 12-18 months or for the next 3-5 years, our specialists are here to help. Get in touch with our specialist tax team and discover more about how we can help you on your business journey.

Call us at 07 3878 9181 or email us at admin@elementsag.com.au.

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TAGS: eofy, tax, tax planning
James Ginty
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