Basing your tax return on government estimates can cost you in more ways than one
Being a business owner is an incredible achievement. Whether you’re a freelancer, self-employed or have a team of employees—serious kudos for making your skills pay. We’re willing to bet that if you’ve made a business out of it, then you enjoy what you do (or large aspects of it). That’s why we do what we do.
So you can keep the focus on doing what you love, we’re gonna need you to slot us into that busy calendar of yours. Here’s why a mid-year tax planning session takes away stress, penalties and unexpected financial dry spells.
You’re in charge but you still have to make the payments
Challenge: One of the best bits about being a business owner is being in charge. When it comes to tax though, you’re the one who is ultimately responsible for making the correct payments on time and that the paperwork lines up. Not so cool.
Answer: A mid-year check in ensures you’re staying true to your tax trajectory and lines you up for your return. This means that you won’t overpay (and have to wait a long time for a refund) or get hit by a penalty for doing your forecasting incorrectly and/or paying too little.
Estimated payments are rarely watertight
Challenge: The estimated payments that the government provides is based on last year’s business activity. Most of the time, this is not a good indicator. There’s so much that can change in a financial year and they can be totally unreliable to model your return on. If your business has taken off in the past 12 months then you’re going to be submitting different numbers. If your business has reduced in size, then you’re going to be submitting different numbers.
Answer: A mid-year check in sits nicely between your last tax year and the upcoming return. Whether your business is up or down, a mid-year meeting realigns those estimates and gives them a much needed reality-check.
A business risk
Challenge: You might have to pay out more than you expected resulting in tight cash flow, and this can actually compromise the continuation of your business (or your lifestyle).
Answer: A mid-year check in ensures you have a plan if you’re going to be paying more this tax year—with plenty of time to adjust. Alternatively, if the government estimate says you should be paying more, but we find out that it should be less, then you’re not waiting around for a refund that was always yours in the first place.
Challenge: This one is particularly important. If you underpay your tax payment then not only will you realize you had to pay more, it will also be a little too late and you’ll have to spend extra cash on penalties. It’s a sucker punch.
Answer: A mid-year check in means minimizing penalties and a clear line of sight on your tax return. The best outcome!
We know that a mid-year tax planning session is crucial if you want to breathe easy knowing your return is in top shape. That’s why we recommend one to any business owner who would otherwise be making estimated payments. Business finances may be our thing but we sure as hell know you’ll get a buzz when you’re only paying what you have to pay, no more no less.
You can find more information about this service here.