Tax Planning for Small Businesses

When you are a small business, you need to carefully monitor your finances as it is crucial for the growth of your business. You have to make sure that your tax liability is reduced. If you are not aware of how to properly plan your taxes, you can choose a company that provides the service.

Your business structure will affect how your taxes are filed. Business structures are not something that is fixed. They can change over time with the growth of your business. Sometimes the previous year’s business structure will no longer fit your business. You can work with Trilogy Tax to find a better business structure that benefits your tax planning. By working with an experienced company, you will be able to save quite a bit of money when the right tax planning is executed. You should understand the different provisions provided under the tax laws of your country. The tax planning service you use will be able to explain these to you. When you are a small business owner, there are many costs that you will be faced with at the beginning. These are called preliminary expenses. You will be able to claim a deduction for these preliminary costs. These will include costs incurred when raising equity for your business, establishing a business structure, obtaining legal advice on business structure, changing the business structure etc. You will also be able to claim a deduction on liquidating a company. This can be claimed over a period of five years.

You can anticipate some of the business expenses that you will incur in the next financial year including rent, professional subscriptions, professional associations and insurance and prepay them. You will be able to deduct the expenses of the coming year from the current tax year. You will be able to deduct a maximum of twelve months of the next financial year’s expenses in the current year. This is something that you can do if there is a higher income expected for the current financial year. Sometimes you will be able to postpone some of the invoicing for the current tax year to the next year. You will need to review your invoicing to see where this can be done. There is the $150,000 instant asset write-off which allows you to deduct assets of the business purchased from assessable tax. You can also review your debtors and if there are any unrecoverable debts, they can be written off.

If there is any equipment or business assets required for the current year, you have to consider if this is in line with your business plan. Any expenses should be paid when they are due or they can be prepaid as explained above. While you can claim certain tax deductions when you spend on business assets, you need to do this only if the assets are necessary for the business. Otherwise, you will not be making a saving in most situations. You can claim a deduction in a future financial year if your business makes a loss in the current year.

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