Having your own business is a matter of pride however when it comes to taxes and expenses, incomes; proper planning is required.
New business is like a small child that needs to be raised appropriately. Managing taxes is like managing the funds in an appropriate manner.
Here are some tips that business owners can consider for perfect tax planning
A. Write off assets: It is the best way to acquire assets for your business growth. It will also help to lessen taxable profits.
B. Good knowledge of tax breaks: Proper knowledge of tax breaks is necessary for financial planning. Whatever you gain during purchase years is drawn back through fewer deductions in the upcoming years.
C. Stock trading:As per Tax Act, there are certain specified rules for trading stocks. You can also do a stock stake.
D. Tax on prepaid expenses: Small businesses usually get immediate tax deductions for certain prepaid expenses that were made before the end of financial year.
For expenses covered in new financial year, the deduction can be claimed in the last financial year.
Check the payments before 30th June.
E. GST: Eligible small businesses account for GST once they receive the payment. You can also pay in installments.
Small businesses also receive a concession known as “Pay as you go”tax installments where you can pay in installments.
It is worked out based on the recently assessed tax return. The income is adjusted to align with increase in gross domestic product.
F. Capital Gains Tax: Usually, there are four CGT concessions available to reduce the capital gains made by business owners who trade active assets.
These are restricted to active assets. Small business entities get many reliefs.
All loans and advances are considered as taxable. The aim is to stop the distribution of profits as tax free loans.
Golden rule:
Record keeping is necessary for effective business management.
Tax laws ask records for upto five years. Hence, manage them accordingly without fail.
Final notes: These are some small tips for tax planning. Get in touch with experts at pndaccountants.
Follow the tips and save your time and money.
