Saving Tax Money For A Small Business

Most small businesses fail to adequately save money for their yearly tax return. This poses a huge problem as quickly a business can become behind on taxes and in turn be chasing their own tails for years on end.

The owners are usually busy running the business and trying to stay afloat that they neglect the tax issue until it is too late.

Paying in quarterly instalments

Eventually the Australian Tax Office (ATO) will expect the business to pay taxes on a quarterly basis. The idea is that it is easier for the business to stay up with the small business income tax if this is done.

Many small businesses fail at this as well because it takes every bit of money that comes in to keep the business going and especially hard for business operators that have income that fluctuates.

Fines and penalties for late payment or non payment of tax

The owner needs to be disciplined and plan ahead for their small business tax payments. It is better to stay current because of interest penalties and fines associated with late payments (further making business owners get behind).

Start a separate account for small business tax savings

Having a special bank account where money is set aside for taxes may help. Every time money is collected a certain percentage could be set aside helping work towards having enough cash on hand to pay any tax bills.

It is fairly easy to determine the amount needed in terms of a percentage. Let’s say 30% is needed for taxes (company rate), then $30 out of every $100 collected should be set aside for tax.

If this is done the business will never fall behind and in the long run the owners will have more money for themselves should they get a reduction in tax payable (working as a forced way of saving money as such).