When it comes to decision making, this time of year has a few big ones to consider. Let’s touch on some of them. I suggest you make sure to discuss these with the key people in your business.
With only 2 months left in the financial year there are two big financial areas to consider: tax and budgets.
When considering tax, now is the time to look at the financial year so far and forecast what you believe May and June might look like. Work with your accountant to forecast what your tax payable might look like and then ask this important question “Where might we invest money this financial year to reduce our tax payable?”.
The key word here is invest. Think about this way, you don’t really avoid paying tax by spending money this financial year. If you’re profitable all you are doing is delaying it to a future year. A useful rule of thumb is to only prepay, buy in advance stuff that you’ll use in the next year.
Avoid the temptation to buy a heap of gear that doesn’t earn you money just to avoid tax. Invest your hard earned profits into areas that will help improve your business in future years – ideally so you have a bigger tax ‘problem’ in the future. Your financial freedom actually comes from profit after tax, so focus on increasing that number (as opposed to only reducing tax).
Even more so than the last few years, your budgets will be really important this year. Many readers will be managing the effects of a poorer growing season, lower commodity prices and increasing interest rates. How resilient is your business to withstand this agricultural trifecta?
Now, we have no idea what the year ahead will hold, so think of your budget as simply one potential scenario of what might happen. If you’re using a good budget template, you should be able to then run another scenario quite easily with some different assumptions about what might happen. The goal is to test what options might be the most resilient and as result the most profitable. I use a purpose built excel template to do all my budgeting with clients.
Don’t leave your business to chance, think about your decisions and have good discussions.
All the best.
David
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Chief of Delivery
Related:
Have a listen to ‘The Financial Bloke’s podcast with David, ‘Learn the traits the most successful producers all share’
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