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A taxing trade – getting the right advice onboard

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Most business owners want to grow their business, but many just don’t know how to go about doing it. Finding experts such as an accountant, business coach, bank manager or lawyer who may be able to add value to your business is key. Of course, you don’t know what you don’t know, and these people can put you in the know. Business is competitive, so the expert who can give you that edge to put you ahead of the rest can only be an advantage to you.

As the end of the financial year approaches, most businesses focus on how they can minimise tax. And this is the time that most businesses give their accountant a call. What businesses should be doing, however, is speaking with their accountants a few times a year. Having cash flow issues around the end of the financial year can often limit your options for reducing your tax.

Someone I know who owns a grocery wholesaler took this advice. Before this – year in, year out – he would only call the accountant close to the end of the financial year. By talking with the accountant throughout the year, he was able to ensure cash flow was under control, and he was surprised to find that he had a much lower tax bill by the time 30 June rolled around. Keep in mind that after 30 June, there is nothing that can be done to improve your tax situation for the previous year.

Trading with the right accountant

Before settling on an accountant, ensure they’re a member of a professional association. Consult friends, family or other contacts, but always remember that while the accountant might be right for their situation, they may not be right for you. Interview your accountant and make sure they’re the right expert for your business. Ensure they also understand the ins and outs of your industry. So if you own a clothing wholesale business, you want to ensure your accountant understands the industry to ensure you get the best outcome.

Ask your lawyer, financial planner or bank manager to refer you to an accountant. Again, you will need to assess whether the accountant is right for you. Also call or visit the website of professional associations such as CPA Australia or the National Institute of Accountants.

Ensure you keep all your records up to date and organised. Also visit the Australian Taxation Office website (www.ato.gov.au). Among all the very useful and important information, it also has a factsheet which shows what a typical wholesaler record keeping system looks like. It sets out the records you need to keep for daily business transactions, covering income records, expense records and employee records.

For example, you should “perform bank reconciliations between bank statements, deposits and cash receipts book at least monthly” and “update inventory records regularly to maintain sufficient stock levels”. 

Improved trading

It’s crucial for any business to have cash flow under control and talking to a great accountant a few times a year is important. Another person who can help you ensure cash flow is under control is a business coach. They will take an objective approach to your business to see where you can improve. A business coach will run his or her honest and objective set of eyes over your business to help take it to the next level. It just may provide that extra push on your business to set it apart from the rest.

Also consider attending tax courses and seminars specific to wholesale. And remember any professional development (including business coaching) that is designed to bring in more revenue for the business is tax deductible.

Business owners may argue they don’t have time to be attending courses, but if you want to grow your business, it’s important to do the research. Other business owners say that seeing their accountant often or getting a business coach is a hit to their finances they can’t afford. However, a business that has experts on board ensuring its smooth operation and that it isn’t throwing away money could be a tighter and better business.

At a glance – three steps to better trading

  • Speak with your accountant more than once a year, and not just near the end of the financial year.
  • Consider a business coach to run an objective set of eyes over your business.
  • Do the research by attending courses and seminars. Visit the tax office website regularly.

So, if you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Wednesday, May 18, 2011

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