Did you get an unexpected bill from Mr. ATO after you lodged your most recent tax return? Well, that just plain sucks. I know this, because it’s part of my job to deliver this not so good news to clients sometimes.
If you ended up with a bill, here are some strategies you can put into place to avoid the same thing happening again next tax return.
Track your income and expenses during the year instead of doing it once a year at tax time. Most clients I have that end up with surprises, only do their accounts once or twice a year and not regularly, so they have no idea how much money they have made in their business!
Put away 30% of net profit (income less expenses) into tax savings. This is a good round number to save that should cover enough tax for most Australians. 30% tax savings will likely be higher than you actually need, because the average actual tax rate across Australians is 25%. Future you will thank me for overestimating your tax savings, because then you can choose what you want to do with the extra monies if you have over saved. Holiday anyone? 🙂