Tax: are you paying too much, too little or about the right amount? 3 tax lies that ensure you get this wrong
First of all, know your numbers inside and out. Those of you who are familiar with Inspire remember that “knowing your numbers” is part of our mantra. It’s the foundation upon which we help build significant tax savings, robust cash flow and better lifestyles for small business owners with young families. Knowing your numbers will cut through the three most common tax lies small businesses fall victim to in the lead up to end of financial year
Your “gut” will tell you if you’re paying too much tax
So here’s why you shouldn’t trust your gut – entirely. Take another look at the question in the title. Because we’re dealing with tax here, as opposed to bundle deals for your home entertainment and connectivity needs for example, it’s kind of hard to say if we’re paying “a fair price” so to speak. With the home entertainment scenario, you could ask a friend in similar circumstances, what they pay, or you could compare online. There are a lot of ways to find out whether you are paying too much.
Unfortunately, you can’t really call a friend across town who also runs a business that might be/ sort of similar to yours and ask how much tax they pay and expect to get a useful answer. Too many additional factors to consider, too many numbers, too many variables. And given that we all know that we should be paying some tax (not sure how much), it seems a lot easier just to go along with whatever your accountant said you have to pay.
If you’ve been in business for some time or even if you’ve only dealt with your personal taxes, you know it has to be paid or else, and you also know that the penalties for getting it wrong are pretty steep. So why rock the boat? Your gut tells you that maybe you could be paying less but at the end of the day, it all evens itself out.
No need a 2nd opinion if you or your accountant just follow the ATO’s guidelines
We all know that good business owners pay their taxes and they do so on time, without trying to squirm out of things or slightly sauté the books. Their accountant’s word is gospel and it’s obeyed as if it was the word of the ATO itself. And that’s the problem. The ATO is aware of the tax laws and collects the taxes you pay. If you overpay them because of advice that you receive from someone else, they’ll collect that too – guaranteed.
So, while you, your accountant or even a “pretty cluey” friend may have a good idea about filling out and filing your forms in compliance with ATO guidelines. That doesn’t mean that you have not overpaid! At Inspire our firm belief is that our clients (and everyone else for that matter) should pay only what they owe and not a cent more. When you’re on your own or with a “fill and file” type of accountant, this may not happen first time around.
Taking a second look at my taxes isn’t worth the hassle
On the way to achieving over $1.2M in tax savings for our clients last year, we found that some businesses were overpaying by staggering amounts. A number of the businesses we worked with saved between 20 and 40 thousand dollars – much to their surprise.
At Inspire, we know that after a quick glance through the books of an average small business, we can identify thousands of dollars in savings. This is how common it is for people to miss thing(s) when they fill and file the necessary paperwork and hurriedly move on. Sure, it means that it’s done, out of the way and out of your hands – but so are the thousands of dollars that you gave away.
So the answer is almost always, “too much”. Get in touch if you’re paying too much tax and want that to stop.