One of the biggest things to announce for 2015 through EzyAccounts’ business advice sector:
It’s the news every small business has been waiting for: a cut to the company tax rate.
And it’s coming in July.
The Coalition government have honoured their pledge to reduce the company tax rate from 30% to 28.5% – a reduction of 1.5%. This will come into effect on 1 July 2015.
While the 1.5% tax rate cut will benefit businesses of all sizes, it’s particularly beneficial for smaller companies, which will enjoy a much-needed cash flow boost. The extra cash available in your business from the company tax cut could be used to support business activity and growth, create opportunities for investment, or even allow you to hire more staff.
However, if you want to ensure your company will actually benefit from the 2015 Australian company tax rate cut, you’ll need to use cash flow forecasting and tax planning.
Why Cash Flow Forecasting?
Cash flow forecasting involves predicting how much money will come into and go out of your business in a given period of time (this may be daily, weekly, fortnightly, or monthly).
Your cash flow forecast will help you avoid cash flow crises by providing warning of any likely upcoming cash shortages. However, it will also help you plan for and keep track of any extra money you expect to become available in your business, such as the money that will be “freed up” thanks to the reduction in the company tax rate.
By keeping track of your extra cash, this money won’t simply slip “through the cracks” and be absorbed unnoticeably by the business. Instead, you can take advantage of your extra cash to make real and positive changes and improvements in your business. This may take the form of alleviating cash shortages, creating investment opportunities, or any of the other myriad of things your company could do with extra cash.
A bookkeeper with management accounting training (such as your EzyAccounts bookkeeper) can help your company produce a cash flow forecast.
Don’t Forget Tax Planning
When it comes to predicting how much money will go out of your business, it’s important to take into account your company’s tax and superannuation obligations. Your cash flow forecast must help you meet your tax obligations in a timely manner by including them in your predicted expenses.
Because Australia’s taxation laws are so complex, tax planning is an essential aspect of managing your cash flow and meeting your obligations so you don’t find yourself in trouble with the ATO.
Your tax agent can help you plan your tax so you avoid any unpleasant surprises at tax time. By inserting your tax plan into your cash flow forecast, you can ensure your tax obligations are met without negatively impacting your cash flow.
And if you’re already taking the tax cut into account with your cash flow forecasting, meeting these obligations will be that little bit easier.
Your Company’s Extra Cash
The 1.5% cut to the company tax rate will have a positive impact on many small businesses. By implementing a meaningful cash flow forecast, and integrating this with effective tax planning, you can ensure your company is one of them.
If you want to make sure your company can make the most of this extra cash that will be available in your business thanks to the Coalition’s promised tax cut, EzyAccounts can help. Call us on 1300 313 397 today to speak to one of our bookkeepers.
We look forward to helping you enjoy the benefits of extra cash in your business.