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With thanks to the O2 Ideas Room for blog posts…

When you’re setting up a business you have a lot of things on your mind. The irony is that the most important part of the whole process, the business’s income and its tax situation, usually isn’t one of those things. The mere fact of not covering your setup costs properly can cost you a lot of money. You need experienced tax accountants to make sure your business isn’t paying a cent more than it should.

The really important things business startups must get right

The fact is that you can usually deduct a lot of your initial outlay on setting up your business.

For example:

• Assets
• Premises
• Plant and equipment
• OHS requirements
• Office equipment
• Depreciation
• Business vehicles
• Business materials
• Advertising
• Merchandising
• Utility fees
• Legal fees
• Accountancy fees
• Consultancy fees
• GST
• Labour costs

If this list looks suspiciously like a series of quotes from your business software, particularly your business plan, you’ve got the right idea. Business taxation best practice is to conduct your business taxation management on very much the same basis as a business plan. That means you must have a very clear picture of your tax liabilities and options before you start. Not knowing the options and the liabilities can cost a lot of money.

If you look at the list again, you’ll notice one thing in particular. There are quite a lot of taxation issues which can work in your favour. Each of those items is deductible. Some are deductible over time. Some, like rental of business premises, may have special taxation allowances. Each of these things translates into a dollar value.

Tax experts and business startups- A winning combination

Most people go to their tax accountant once a year. They don’t even consider that they’ve got expert advice on tap whenever they need it. That’s almost always the case with business startups. The lack of awareness of tax liabilities and options is likely to mean missing a lot of opportunities to reduce tax and maximize revenue.

A very large percentage of businesses crash within three years of startup. Most crash simply because they run out of money, or their revenue can’t keep up with their payments. That lack of revenue can truly be said to be fatal in many cases. So taking the opportunities to reduce tax payments and maximize income is likely to be crucial to the viability of the business at some point during the critical startup period.

Tax experts can deal with these issues at the point of startup. They can:

• Monitor and research tax allowances
• Give advice regarding taxation options
• Give technical advice regarding proper maintenance of tax records
• Evaluate taxation risks
• Do financial projections based on taxation management schemes
• Evaluate the tax implications of business plans
• Check and evaluate business investments for best tax outcomes

Each of these functions can involve a lot of money. Every step in business needs to be calculated carefully to avoid loss and exposure to risk. That’s what tax accountants do best. Don’t think of your tax accountant as “just an accountant”. Consider them part of your business team, and find out what they can really do for you.