5 Essential Tax Goals to Set This Year

Congratulations! You’ve got your personal and business planning well underway for the year. Your goals may not be completely clear yet as they’re still percolating away in your thoughts, but you’ve started the process.

Hang on. What is that hiding in the back there.... Oh... Taxes. Groan. Can't I leave them there and do them next year?

While it’s tempting to hope that your taxes will sort themselves out, now is the best time to decide on your tax goals, while you are in a planning frame of mind as you’ll be able to relax knowing there are no surprises lurking in the future around your tax obligations.

So how do you create goals around tax?

Essential tax goals

These are the 5 essential tax goals I recommend you set, based on my more than 20 years of experience as an accountant.

1. Lodge your returns on time

This might be an obvious goal to have yet I regularly have new clients coming to me who are behind on their lodging obligations. They get so busy in the day to day of their business that this essential task gets put off.

It can be helpful to break down this goal, so it becomes easier to manage.

Find out what returns you are required to lodge and their due dates and list them out. Include your Income Tax Return for you and your business as well as your Business Activity Statements (BAS).

Now work out when you need to have your information available for your accountant. Remember to give them enough time to complete the work and still lodge on time.

Go and put those dates in your diary now and ensure you set aside time to do any collating or tidying up of information.

2. Set aside funds for your taxes

Not enough money set aside to pay your income tax and GST is one of the highest stress areas that new clients come to me with. I do recommend having a separate bank account set up for your taxes, one where you can’t quickly access the money, so you avoid the temptation to “borrow” that money for other expenses.

Next you need to decide on a percentage of every sale that will go into that bank account. It’s better to put too much aside, rather than not enough! Your accountant will help you to decide on what that percentage should be for your business.

Decide when you’re going to transfer that percentage into your separate bank account. At the end of each day? At the end of each week? Twice a month? Again, this is a good topic to discuss with your accountant.

What will the trigger be for you to make that transfer? Will you have an appointment in your calendar or a reminder coming up on your phone?

As you already know all of the due dates for your income tax and BAS payments (from goal one) you’ll be able to align your cashflow.

3. Lodge any outstanding returns

Do you have any outstanding returns that need to be lodged? If you have a number of outstanding returns due it can feel overwhelming and stressful. You’re left wondering how on earth you’re ever going to catch up!

Depending on how many you have you can break them down to more manageable sections, for example into years or groups of years, or breakdown the timing to complete them to two per month until they’re all completed.

It will be so much easier for you to make good financial decisions in the future, because you’ll have all of the information that you need in your completed returns.

4. Plan for your tax

Put time in your calendar to do tax planning in May (when the Government Budget comes out) so you have a more informed idea of what income tax you, or your business, will have to pay for the current financial year and when. Then if you have more money saved that you need you can work out what to do with it. Maybe pay yourself a bonus!

Examples of the questions you discuss with your accountant could be:

How does your estimated tax compare with actual trading results, now you’re 10 months into the financial year?

Is there any tax benefit to purchasing an asset e.g. business car before the end of the financial year?

I want to put money into my superannuation, how does that impact my tax payments?

5. Get support

And my favourite goal - get a supportive accountant or tax agent to help you achieve your tax goals so you can tick them all off before the end of the year.

Stepping fully into your role as CEO and setting strong tax goals will release the energy you’ve been wasting on worrying about it. Instead, you’ll be able to redirect that energy to make great decisions that will grow your business. Having clear goals around your tax outcomes means that if you start to worry again you can be confident that your obligations are on track.

If you’re ready to get on top of your tax obligations, then book a free 20-minute power meeting. We’ll review the tax goals you want to achieve this year and I’ll let you know the best way I can support you.