It'll be mid-year before you know it. Remember those good intentions you had about being more organised? As the end-of-financial-year approaches, feeling frazzled about your tax is a common complaint for so many of us, especially if you have a business. Wouldn’t it feel great to break the cycle and know that you're paying the least possible tax, without the last minute stress before June 30?
We asked Newcastle-based Accountant, Business Adviser and Strategist Jason Bartlett how you can go about it and we discovered some hot tips, especially for local business owners.
Doesn’t everyone dread the end-of-financial-year and having to pay their next tax bill? Actually, no! That’s only the case if you’re caught in the cycle of playing catch-up. At this time of year, I get calls from new clients who say they’re only just getting over last year’s tax bill and next years is coming fast. Often they’re quite stressed about how they’re going to pay it. They want to break the cycle, but they’re not sure how.
Ok, so how do I break the cycle? Have a look at your current year figures now. Talk to your accountant or adviser. I guarantee you'll enjoy not having to worry about it at the eleventh hour. If you're in business, we want to be looking at your March result so we can start planning what your tax bill looks like. It’s no good doing this once a year. My rule of thumb is at least twice. My bigger business clients will do theirs four times a year, and that’s what makes them successful. Regular reporting, or benchmarking, means you understand your business and can jump on any problems early.
I'm a business owner, and cash flow is a real issue. Are there ways to get around this? Very few businesses have a lot of cash flow at this time of year simply because if they had it throughout the year, they most likely had something to spend it on. Cash flow is so important that most successful businesses are no longer geared up to do their tax planning in June. The culture has changed. From a business perspective, tax planning in June is a bit old-school. You’ve got to be doing it throughout the year.
You mentioned regular reporting or benchmarking. Exactly what do you mean? If you want to grow and enhance your business, you’ve got to be looking at these things regularly. It’s a lot easier to make smaller changes more regularly than asking ‘how do I overhaul my business?’ in one hit. That’s a big ask. If I’m talking to clients four times a year, making two or three small changes each time, that’s significant.
Do you have any general tips for business owners to minimise their tax? To be honest, paying too much tax isn’t the only thing you should be worried about. How is the business actually going? How do we help manage cash flow? Looking at your accounts in April, May and June will give you an idea of what’s in the pipeline. You can even benchmark against your own previous year’s results, especially if your business is a unique industry. That’s how you can break the cycle, lose the frazzle and start enjoying some peace of mind.
Jason Bartlett is a Partner at leading accountants and business advisers DFK Crosbie, which is proudly based in Newcastle. He's been helping small to medium business owners achieve their goals for more than 25 years.