Want to forecast and assess your trust or sole trader tax position during the year.
Without a simple template, it can be difficult to know what tax you have incurred and whether you have put enough funds aside.
Check out the video showing how to do this at https://courses.morrisonabs.com.au/tax
The video goes through the steps below, so that you can regular assess your tax position and whether you are in front or behind with regard to instalments paid to the ATO and funds put aside..
Step 1 Check Xero is accurate
In the bank reconciliation reports, check there are no outstanding payments or receipts that need to be cleared out
Check all reconciliations are up to date
2 Check whether your tax return is on an accruals or cash basis
Ask your accountant
Review prior year tax return and see if there are reconciliation items for debtors and creditors
3 Download profit and loss statement based on whether your tax return is on an accruals or cash basis
4 ‘Annualise’ the profit to calculate a full-year forecast
5 Add in year-end adjustments such as;
Depreciation
Hire purchase charges on car payments
Interest on loans
6 Add in tax return adjustments such as;
Entertainment
Increase or decrease in superannuation payable
Increase or decrease in other provisions (eg. annual leave)
7 For discretionary trusts, decide who will receive the profit***
8 Calculate the forecast tax for the year
For a trust, allocate profit to beneficiaries and apply the relevant tax rate
For a sole trader, apply the personal marginal tax rate
Take into account instalments paid during the year
9 Assess whether you have currently put aside enough tax
10 Calculate the percentage of gross sales to put aside for tax