Own a Small Business? Tax Planning Tips for Success

Small businesses of all sorts are the beating heart of what makes economies such as Australia’s thrive. Many small business owners find their work, and sense of purpose and community it provides, to be very fulfilling. Having the ability to start your own endeavour and apply your trade by providing goods and/or services for your customers is also financially liberating – so long as you plan for success!

What are some of the most important tips to help your small business not only ‘get by’ but to truly thrive and succeed?

Set Out SMART Goals

Being in the right place at the right time often involves more luck than hard work, and it can be quite lucrative if you’re so lucky. For most businesses, however, ‘timing the market’ simply won’t work and you’ll need to thrive based on hard work and consistency. All of this requires setting SMART goals:

  1. Specific: what exactly is your end goal, financially? Who is going to be responsible for carrying out the steps taken (and what are those steps?) to reach that goal?
  1. Measurable: this is the big ‘how much’ question. For example, how many sales do you need to close to reach the desired revenue for your business? What is the break-even for your specific product/service and how much profit do you aim to make?
  1. Achievable: is the goal too lofty or is it realistic? It should certainly be the latter. Although there are many force majeure events that nobody can plan for, have you considered realistic conditions needed to achieve those goals? Do you have the labour, equipment, and time (or any other resources) needed to achieve the desired goal?
  1. Relevant: big picture time. Why are you setting out these financial goals in the first place? What effect will they have on the growth and success of your business? Think of the consequences of what can happen once you’ve achieved those goals.
  1. Time-bound: when do you hope to achieve your financial goal? Set a deadline and place milestones along the way for bigger goals so that you have a sense of progress and achievement along the way.

Note that SMART goals are not only useful for tax planning, but they’re also applicable in many other endeavours for your business operations.

Manage and Mitigate Risks to Your Organisation

What sorts of risks does your business face now and in the future? Financial risks are essential; no risk, no reward. But some risks are simply too great and you may wish to mitigate them as best as you can.

Some of the most common risks to an organisation include a damaged reputation, failure of a product or service, and labour shortages. For small businesses, some of these may impact your business in a much greater way than they would a larger buisness. You must consider your own internal strengths and weaknesses as a company to better understand risks, whilst also taking into account external factors.

These can be analysed by making a simple SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. Make a simple quadrant on a sheet of paper with each quadrant showing Strengths, Weaknesses, Opportunities, and Threats. List out all of your internal strengths and weaknesses as a company, then list out all external opportunities and threats that your organisation may face.

Badawy Large & Powers

Own a small business? Get professional tax planning from small business accountants Melbourne at Badawy Large & Powers.