Paying Tax Can Be A Good Thing
Paying tax means your business is profitable.
It’s good for lending and good for business valuations—and may even grant you access to capital and leverage you wouldn’t enjoy otherwise.
Many business owners don’t realise this however, so there’s a tendency to want to reduce tax as much as possible.
Sometimes, tax reduction is even achieved through questionable asset purchases that are often not fully thought through. While these purchases can succeed in reducing tax, they can increase debt, impede cash flow and reduce future profitability.
Importantly, the entire purchase price of assets cannot always be claimed when completing your tax return.
Let’s look at one example: if someone said they’d give you $3 but you’d have to give them $10, would you do it? This is a simplistic example of questionable, non-necessary asset purchasing purely for tax minimisation.
It doesn’t make sense if you step back and think about it!
Moreover, we can’t count the number of times we’ve been asked whether a client should buy a questionable asset to minimise their tax. If they don’t really need it and the primary motivator is just to reduce tax, the answer is often to avoid the purchase altogether.
By making such non-necessary purchases, you could end up with an asset you don’t need, a debt you now need to service, and a business that’s less profitable than it should be.
Successful businesses pay tax.
Let us let you in on a little secret: tax is a byproduct of success.
If you’re making sales, you’re paying tax. Tax isn’t something to be avoided at all costs, but a sign your business is bringing money in.
Instead of viewing tax in a negative way, we can work with you and help you turn tax into a positive for your business.
Smart businesses pay the right amount of tax.
While paying tax is a good thing, you shouldn’t have to pay more tax than is appropriate.
By getting to know your business we can partner with you and provide advice and guidance on tax planning, as well as on your short and long-term business goals, budgets, cash flows and more.
So, don’t avoid paying tax—pay the right amount and set yourself up for success. Schedule an appointment with C3MG Consulting to discover how we can partner with you to take your business to the next level.
