Getting your tax done early can have tremendous benefits for business owners.
As of writing it is early August 2021 and some places in Australia are experiencing the effects of the pandemic more than others. Cash flow issues are still being felt by many Australian businesses.
As recently as June, 3 out of 4 Australian businesses reported experiencing cash flow issues. With the lockdowns that have been enacted since then, that number is likely to currently be higher.
And that leads us to our first benefit.
1) You get your refund faster
This one is pretty obvious to most people, but the benefit is especially pertinent right now.
With at least 3 out of 4 Australian businesses currently experiencing cash flow issues, getting your tax work done early might improve the cash flow position of your business. That’s because you will simply get your tax refund faster, if you a refund is coming your way.
Even if you are not currently experiencing cash flow issues, getting that refund money into your hands faster is a good idea.
2) You will know your tax liability
This one is less obvious than the first but is still important.
By getting your tax work done early, you can know with certainty what your tax liability is going to be.
The number might not be immediately payable, but that is less important. What is really important is providing some certainty in your business about what you will need to pay.
That way you can plan out your cash flow budget and forecast your financial position with more clarity, which will ultimately improve your business and decrease risk.
Further, once you know what your tax liability will be, you’ll be able to increase your chance of being able to pay it because you’ll be able to plan your cash flow with more certainty.
3) If your income has gone up in the 2021 year you’ll have access to more funds
Despite many businesses still experiencing cash flow problems, by and large for Australian businesses the 2021 financial year is going to be an improvement on the 2020 financial year. Australia had its first recession in a long time in the 2020 financial year, but the 2021 year saw some staggering recovery rates for some states in particular.
That means for many businesses their income will have gone up during the 2021 financial year.
Businesses whose income has gone up during the 2021 financial year will have more access to funds from a loan perspective. This is because the servicing aspect of applying for a loan will look better.
Getting your tax work done early will prove that up, meaning you’ll have access to more funds.
If you’d like assistance with your tax work, please get in touch with us.I want tax help