Your next structural step in the process of turning your business around is to meet with your accountant much more frequently so you can really work through your tax planning, your business cashflow, your profit levels and the tax implications of what you are currently doing.
Then create a plan for how you’re going to address these issues so you can put a couple months up your sleeve, as opposed to always coming to your accountant when the problems have already surfaced, or the financial year’s already ended, so you’re always playing catch up.
Keeping Your Business Firing On All Cylinders Is More About Proper Planning
For example, do you have a system in place to put money aside for all of your liabilities?
If you invoice someone with GST and they pay you, you’re effectively collecting the GST on behalf of the ATO. So do you have a system in place to make sure you move a portion of that aside into a GST account or to a tax account, so that when you do meet your lodgements and there is a debt on your account, you’ve got funds allocated and access to pay the debt?
It’s about developing a sensible structure and process to manage the debt, and as we’ve discussed, that’s where the payment plan comes into place.
You know how much you owe, how much you can afford over a certain amount of time. That is a structured system and you should do that before you’re in the red.
You can pre-empt the level of income the business is going generate through tax planning, make an estimate of what tax is due based on that level of income, and work backwards to park money aside as you would your savings.
I know it’s a commercial difficulty in the world of small business. Cash flow does get tight, clients don’t pay you, but wages and your other expenses have always got to be paid.
The world of small business is challenging, but it’s always better to have some sort of plan of attack when you go into business or when you operate a business. And if you’ve followed along so far and completed the steps we’ve completed in the previous posts, you’re probably well on your way to getting things back on an even keel…
But there’s more to do. Would you like our help?
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About The Author: James Huy Vuong is a CPA, Registered Tax Agent, Business Broker, Certified Exit Planner and the owner of Your Accounting Partners, an Associate of Negotia Group. Partnering with businesses from start to scale thru to sale.
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