Top tips on how to prepare for tax time.

Top tips on how to prepare for tax time.

It’s hard to believe the 2022 Financial Year is nearly over.  We have all seen Covid staffing challenges and supplier constraints to changing customer behaviours and global events, crypto boom and bust, record commodity land and livestock prices, continuing low interest rates, and now a change of government. 

As I am writing this article I wondered whether we are too late to be planning for this in June and perhaps your best bet is to start the conversation now about next years plan.  Even better, you should start thinking about your 3 to 5 year plan, as each year seems to fly by much faster than it used to.

However, not all is lost and there are three things you should consider in your final sprint towards the end of the 2022 Financial Year.

The dirty word - TAX.
Everyone worries about paying tax or more to the point how much more will you have to pay this year.  I’m sure nobody sees this as good news, but the bottom line is if you get a tax bill it means you have a profitable business.  That should be celebrated, not looked upon as an issue.

The best way to turn this feeling from a negative into a positive is by regularly reviewing your performance. This allows you to make informed and timely decisions to invest some of that profit before 30 June to reduce your overall tax bill.  But, you should always be looking for a return on that investment so that in future, your business will be even more profitable and have an even bigger tax bill. I felt your jaw drop and your subconscience say – is he joking -   no I’m not, but with a great accountant that understands your circumstances can assist you to ensure the best possible outcome is achieved.  

Remember, if you are thinking of making bigger purchases like a new tractor or header, or even a trusty Hilux, expect to wait a while as Covid and global events have been a major disruption to supply chains.

Pause and take a breath
While we are all running at 100 miles per hour, now is actually the best time to pause and reflect.  Review what you have been doing for the past 12 months, recognise where you are at today and re-evaluate where you want to be at this time next year.  Then create a plan.

A business plan should focus on more than just financial goals.  It should try to find a healthy balance between earning the income you need and living the life you want to.   Your financial planner will have some great tools to help you identify and achieve your goals.

 Take control of your planning
We are seeing livestock,  commodity prices and real estate returns the best they have been in decades. There has never been a better financial time for rural economies despite the many challenges we face.  Now is the time to prepare and be ready for opportunities to maximise your business. Having great software like Xero to manage your finances is the key.  Clients that I have helped move to Xero are now seeing the benefits of having information at their fingertips allowing better analysis and faster decision making.

In the end, the more you understand about your tax obligations and opportunities, the better the outcomes will be for your business. If you don’t already use the services of a certified accountant, now could be the perfect time to work with one. 

Andrew Freebairn CPA
Principal of Forsyths Coonabarabran