Most business owners think about tax once the year is over. The accounts get done, the tax bill arrives, and then you find out how the year actually went.
The trouble is, by then there's very little you can do about it. The numbers are set, and the only question left is how to pay.
If your balance date is 31 March, you're now more than halfway through the year. That makes October one of the most useful times to stop and look at where things are heading, while you still have time to do something about it.
Tax is worked out on what happened during the year. Once 31 March passes, the income has been earned, the costs have been paid and the decisions have been made.
That means most of the choices that affect your tax need to happen before the year ends, not after. When tax planning starts in March, or after the accounts are done, a lot of those choices are already gone.
Waiting doesn't always mean paying more tax. But it usually costs you in other ways.
A tax bill you weren't ready for. If the business has had a good year, the tax bill will reflect that. Finding out in March or later leaves very little time to put the money aside.
Provisional tax that doesn't match your year. Provisional tax is often based on last year's result. If this year is tracking well ahead, the instalments may not cover what you'll owe, and Inland Revenue can charge interest on the shortfall.
Options you can no longer use. Some decisions only count if they're made before 31 March. The timing of equipment purchases, writing off debts you won't collect, and how much you take out of the business all need to be looked at while the year is still open.
Cash flow pressure. A profitable business can still be short of cash. When tax comes as a surprise, it often lands at the same time as other big costs, and that's when things get tight.
By October, you have six months of real numbers to work with. That's enough to see how the year is tracking, without guessing.
There's also still time to act. For many businesses with a 31 March balance date, the next provisional tax instalment is due on 15 January. Planning now means you know what's coming before then, not after.
And the end of the year is busy. Christmas, the summer break and slower trading months can all affect cash flow. Knowing your tax position before then makes it much easier to plan around.
It doesn't need to be complicated. When we sit down with a client in October, we usually:
The point isn't to find clever tricks. It's to make sure you know where you stand, and that any decisions you make are made with the tax side in mind. You can read more about how our business tax planning support works.
If you're not sure of the answer to any of these, it's a good time to find out:
If you'd like a clearer picture of where your business stands before the end of the year, book a complimentary Clarity Call. It's 20 minutes, there's no obligation, and you'll come away knowing what you need to think about next.
Prefer to talk? Call us on 0800 124 685.
