Top 5 Tips for Tax Planning: Business Owner Edition

Who gets excited about tax time?

… Anyone?

I know, tax time can feel like a major drag, but as a business owner, it’s actually a grossly
underestimated opportunity to make the most out of your money!

I sat down with Scott from CNS Accounting to get the must-know tips for business owners to
make tax time a breeze. The truth is, it all comes down to being prepared.

With the right knowledge, you can start budgeting for tax today with 2 simple steps:
1. Plan ahead for the taxes you know you’ll have to pay and how you can reduce them.
2. Budget your actual dollars to ensure there are no surprises when the “tax man” comes
knocking.

Remember, you can’t budget if you don’t know what taxes apply to you. So the first step is to
create a tax plan, the second step is to create a budget.

Have you ever been slapped with a giant tax bill you weren’t expecting? It’s not a fun feeling, yet
sadly it’s super common!

Most people’s experience isn’t that they’re upset they have a tax bill,
it’s that they felt it came out of nowhere.

So here are the 5 steps you need to know to help you plan for tax, straight from the experts!

1. Systemize it.
Get a process in place that ensures you’ve got tax on your mind all year, not just at the EOFY.

2. Formalize it.
Keep a running profit and loss sheet and revisit it at least quarterly, if not more often.

3. Minimize it.
At each tax checkpoint, keep an eye out for opportunities to minimize how much you’re paying.
Often, the best and bulkiest way to do this is to simply look at the structure of your business (ie.
sole trader vs. corporation structures, etc.)

4. Predict it.
On top of predicting your year-on-year taxes, you can also be prepared for the longer-term goals.
Plan ahead for the “someday” when you might decide to sell your business! Whether it’s part of
the original purchase plan or something you don’t really expect to think about until retirement
rolls around, tax planning allows you to reduce the amount of capital gains tax you’ll eventually
have to pay.

5. Save it.
Once you know how much tax you’ll need to pay (thanks to your new stellar tax planning skills),
start a separate bank account specifically dedicated to saving for your tax bills – and don’t spend
it!

So there you have it, 5 simple steps to save your tax! Now the real beauty of having a tax plan and
budget in place is that it allows you to clearly see whenever your business has a little extra
funding!

When this happens, it’s a great chance to make your money work for you.
One bottom-line financial tip you’ve got to know (if you don’t already) is to never just leave
money sitting in the bank! If your money’s not working for you, you’re losing it!

Use your shiny new tax plan to help you invest funds back into your business – maybe to scale or
upgrade – or treat your stakeholders (and yourself) to a well-earned bonus or vacation.

However you decide to use it, planning ahead and budgeting means eventually, you’ll find some excess!