Hello Chasers,
One of the biggest causes of cashflow crises for small business is tax – Income Tax, GST, PAYG etc.
Businesses new or growing businesses rely heavily of a strong, consistent cash flow. Receiving an unplanned tax bill out of ‘left-field’ can heavily impact your cash flow negatively, and the unexpected shock can cause enormous stress.
To avoid this situation and take control of your cashflow you need to attend one of our Tax Planning meetings – we hold these for our customers after we have completed their Marc BAS and have9 months data fully reconciled.
Our Tax planning meetings provides you with an opportunity to assess where your business is currently positioned with its cashflow, profitability and offers effective strategies and solutions which can help you plan and prepare for tax liabilities.
We focus on ensuring you have strategies to pay the least amount of tax legally required – there is nothing dodgy with our advice!
Choosing from hundreds of different strategies allows you to maintain or preserve cashflow with the surety of knowing how much tax you will be required to pay at years end when the income tax returns are completed.
We also recommend a strategy of putting money aside in a separate bank account for tax so that you are always better placed to pay these liabilities when they are due. If you set up a separate bank account and start putting something aside as soon as possible you will quickly have funds accumulated to pay the BAS. For example, 1/11th of each sale represents the GST component paid to you by your customers to hand over to the ATO is a great place to start.
To keep ahead of the tax liabilities, build a custom formula for your business which gives you a percentage of sales to set aside each week to cover the estimated income tax liability too. This is best done with one of our Team so you can make sure all variables in your business are taken into account (e.g., number of staff, your net GST figures and your business/personal average tax rates).
Whilst only ever a good estimate and never be an exact science, if done right you should always have most of your tax funds set aside when things fall due. Making up any shortfall is so much easier to do than trying to work out where to find the whole amount under stress!
We have all heard the expression that cash flow is king. And if you don’t agree with this statement, you might want to ask the nine out of 10 small businesses that have failed because of cash flow problems. That’s, right, according to Dunn & Bradstreet, 90% of small businesses close their doors because of poor cash flow management.
In the words of Benjamin Franklin, ‘failing to plan is planning to fail’ and controlling how much tax you have to pay is one area that all small business owners can control provided they are disciplined.
Contact Shannae Hewett on 55612643 if you would like to book into our tax planning meetings before it is too late!
Have a great day!
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