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Your Business Tax Planning Guide for 2022

Written by Tim O'Brien . April 12, 2022
11 min read

Hopefully this thought isn’t too off-putting for you – it’s only about 12 weeks until the end of another financial year! The perfect time for business tax planning.

In what has been another prolonged period of interruptions (again largely COVID-19 related) I think many of us could be excused for losing sight of at least one aspect of our lives this past twelve months. Throw in the recent noise of another Federal Budget and an upcoming Federal Election, and obvious political concerns on a global scale and it’s easy to become distracted!

Small business has again been at the forefront of the interruptions. There is every possibility you have had to deal with employee absences due to isolation requirements, and difficulties in gaining access to both your customers and your suppliers.

Fortunately (from an inward-facing perspective) there is still time to take stock of what you/your business has achieved this financial year to date and put some focus on where your business is heading. There are tax planning strategies worth exploring prior to 30 June that could potentially minimise your tax liability, reduce the impact of external factors, and thus position your business to take advantage of opportunities that present themselves.

It’s a real opportunity to stop, reflect and take charge of your business by planning ahead and focusing on the numbers of the future rather than of the past. BLG have some tools to help with this.


Why Tax Planning is Important

The team at BLG believe tax planning is one of the best tools available and should be re-visited by small business owners at least once a year. It’s a great opportunity to down tools and take a moment to be proud of what you have achieved, critical of what you haven’t, and envisage where you want your business to be in 3 months-time, in a years-time, in 5 years-time depending on your goals.

As business advisers, tax planning is a great opportunity for us to help you be proactive with your business, provide valuable input around your projected earnings and tax position and show you how the business is performing as opposed to how you think it’s performing. This planning can be extremely important for both the short and long term success of your business.

Make tax planning that one time of the year where you actually do set aside a day to step back from your otherwise hectic schedule to assess the health of your business (and yourself for that matter). There’s a good chance your customers, employees, family and friends, and business bottom line will thank you for it!

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What does Tax Planning involve?

In more detail, tax planning means reviewing your current business, asset, and liability position before the end of the financial year. This may give you a better understanding of where the money you are making is going. It also involves identifying any opportunities or areas of concern for your business so you can make financial decisions in the short to medium-term that are well-informed. Through tax planning, business owners have the opportunity to implement strategies before 30 June that manage your tax position.

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When is the Right Time for Tax Planning?

There are numerous tasks that can be performed and aspects of your business that can be analysed prior to financial year end. It’s clearly important that this is done in a timely fashion to ensure your strategies are set up in the correct manner and also for maximum effect. This process should therefore start now.

Making sure you have covered all your bases ahead of financial year end will put you in good stead and may save you thousands or even tens of thousands off your tax bill. Like many other aspects of your financial life, through knowledge and understanding comes clarity and improvement.

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Questions to Ask Yourself

If you are unsure about seeing an accountant or business adviser it’s a great idea for you, as the business owner, to review your business by asking some key questions. Answering these questions will help create a picture of how your business is tracking:

  • Are your sales in line with your expectations? If not are there opportunities to reach out to new customer bases? Are less profitable customers impeding your ability to service your better ones?
  • Do you have issues with collection of debtors? If not do you need to address your payment terms? Are you chasing your debtors promptly and regularly?
  • Are you incurring unnecessary expenses? Are your expenses in line with expectations or industry norms? Are you getting an adequate return on any advertising spend?
  • Are there expansion opportunities within your current business? If so what do you need to put in place to explore these?
  • Are your investments providing the returns you were hoping for?
  • How does this year’s performance compare to last year?
  • Are there any opportunities you should be taking advantage of?
  • Have you provided for any potential tax liability?
  • Are there any strategies you should be implementing prior to 30 June to manage your tax liability?

Once you’ve answered these questions it is our hope that you will feel comfortable with your business position and ready to forge ahead. Or maybe the results were not crash hot like you were expecting and you need some direction. Whatever your review turned up, setting up a business and tax planning meeting is the recommended next step.

Whether you decide to see an accountant or business adviser following your business review, just make sure they offer ‘Tax Planning’, not just Tax Advice, as they require different approaches. We give you a hand with this below.

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Questions to Ask Your Accountant or Business Adviser

So now it's time to put the onus on your accountant or business adviser. Can they offer you an effective tax planning strategy for your business?

To determine whether the accountant or business adviser you are meeting with can help you in the right way, you should really only need to ask two questions to receive the necessary feedback. But make sure that any advice they do offer is tailored for your business circumstances and not a one-size-fits-all approach - because that never works. Following are the questions and the types of responses you should be getting back.

1. How does your tax planning process work?

The accountant or business adviser should offer the following:

  • A review of your year-to-date performance in comparison to previous financial years
  • Feedback on your business performance compared to industry standards
  • Commentary on any trends or areas of concern in your year-to-date figures
  • A review of your financial structuring
  • Business profit and income tax projections which in turn assist in all important cash-flow planning
  • A projection of your year end results based on our knowledge of your business
  • The ability to implement any changes that need to be made before the end of the financial year

2. What are some of the tax planning strategies you suggest?

On the back of the above business analysis they should then suggest some strategies to help manage your tax liabilities and strengthen your balance sheet. Some of these include:

  • Understanding the impact of changes to individual and company tax rates and the reduction in your tax payable for 2022
  • Taking advantage of full expensing of assets prior to 30 June to obtain an immediate tax benefit for your business
  • Understanding any other incentives or tax law changes and how it will impact on you and your business
  • Reviewing the remuneration packages of related employees
  • Maximising your superannuation contributions following past reforms, and detail any impact the reforms may have on you and your family group
  • Advising the minimum pensions to be paid from your superfund in order to earn tax-free income
  • Assessing the viability of any salary-sacrifice options
  • Reviewing your current business structure
  • Review of your family groups assets and liabilities
  • Ensuring compliance with Division 7A in relation to Director’s loan accounts and unpaid present entitlements (unpaid trust distributions)
  • Reviewing your ledger for potential unrecoverable debts or obsolete items of stock or equipment to be written off
  • Reviewing your Estate Planning and Succession Planning
  • Managing and advising you of your estimated tax position

At the end of a business and tax planning process with your accountant, you should expect to walk away with more insight into your own business and a greater level of surety to make short to medium-term financial decisions.

If you are ready for the next step to make sure your business future is strong and secure, feel free to take our team through the tax planning hoops and get the answers you deserve here.

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Little Effort, Big Gain – Next Steps

No matter how big or small your business is, tax planning is worth considering.

Remember, it’s not just about tax, it’s about gaining a better understanding of your business as a whole and putting goals in motion. With the right advice you can achieve more than what you expect.

Although the process may involve an extra trip to the accountant, I believe it is an area of our work where we provide further value for money.

Your business is your livelihood so make sure you meet with a trusted accountant or business adviser for your business and tax planning.

If you are investigating a number of business advisers before making your decision, our team at BLG are available to delve into your business and show you a clear path forward. There is no cost involved in an initial discussion with us about your business, and if you feel we aren’t the right fit for you then there’s no obligation to work with us, so why wait? We encourage you to talk with us today and get things moving!

Keep in mind your business and tax planning will need to be done prior to 30 June, ideally early in the last quarter of the financial year, so that any necessary action can be taken before year end.

Wishing you every success!

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*This information is relevant at the time of publishing and is subject to change*
Written by Tim O'Brien . April 12, 2022
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