Taxes are dreaded by most professionals and business owners, and rightly so sometimes. Just hearing the word ‘taxation’ is enough to cause them to break into a nervous sweat. However, tax planning is a legitimate way to reduce your tax liabilities in any financial year. It helps reduce your taxes by optimally utilising tax rebates, exemptions, and other benefits that authorities offer to minimise the tax obligations.
It involves making financial and business decisions to reduce the tax incidence by using all the beneficial provisions of tax laws.
What are the types of tax planning?
Some people perceive tax planning as a process that allows them to mitigate their tax liabilities. However, tax planning is also about determining and investing in the most appropriate securities at the right time to accomplish your financial goals.
Here are a few effective methods of tax planning you should know:
Short-range tax planning
Short-range tax planning is often executed towards the end of the fiscal year. Most business owners resort to short-range tax planning to limit their tax liability legally while meeting their annual ATO obligations at the end of the financial year.
While this technique does not partake in long-term commitments, it is recommended to consult a tax specialist to reap substantial tax savings.
Long-term tax planning
Under long-term tax planning, your tax consultant outlines your entire action plan at the beginning of the financial year. It focuses on complex financial goals for a more extended period. While this method may not offer immediate tax benefits, it is effective in the long run.
Structural tax planning
This method considers the various provisions of the law to identify a functional strategy to reduce taxes. You should consult a reputed tax consultant to discuss the several types of exemptions, deductions, and incentives to help you reduce your tax obligations.
Strategic intergenerational tax planning
This type of tax planning is devised to maximise wealth transfer with a specific purpose in mind. Thus, having a professional tax consultant by your side will assist you in selecting the appropriate investments for your business to ensure the desired outcomes.
What are the advantages of tax planning?
One of the excellent perks of tax planning is enabling your business to make smart investments while efficiently utilising the available resources. Thus, regardless of the size of the business you own, hiring a well-experienced tax consultant to ensure optimum tax savings always works in your favour.
Listed below are some perks of tax planning when executed with the assistance of a tax consultant professional:
Reduced tax rate
By investing in mindful planning, you can quickly lower your effective tax rate using lesser-known tax strategies.
Less taxable income
You can also request your tax consultant to assist you in broadly distributing your business’s income to further reduce the overall tax obligation.
Flexibility in tax payment
Proper planning will offer your business a flexible approach to paying taxes. This will enable you to mitigate the financial impact on your company or other business entities.
Better tax planning with the assistance of a reputed tax consultant will enable you to determine legitimate ways to leverage tax credits.
Are you looking for a well-experienced accounting practice to boost your business growth? We are here to assist! At Chartfords Chartered Accountants, we work with our clients as an outsourced in-house solution to handle their various accounting needs. We are a professional accounting firm offering business advisory and coaching to help you structure your business for asset protection, tax benefits, and to save money. For more information, call us at 1300 163 817 or email us at .