[00:00:00] Fiona Johnston
We've made a lot of progress as a society in many of the areas that we needed to in the last few hundred years. But one thing that has not changed enough is money. If we want to be able to tip the scales towards the favor of marginalized people, we need to understand the secrets to making money in small business.
The more we talk about money and the secrets that usually stay at the golf club, the more likely we are to be able to make money. My mission is to get more money into the hands of good people, specifically good business people like you. This is Money Secrets, the place to learn about the money secrets of successful small business owners.
Because I believe small business can change the world. And in order to do that, we need to be making a lot of money. Let's go.
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This podcast episode was recorded on the lands of the Wurundjeri people of the Kulin nation. And I'd like to acknowledge them as the traditional owners and custodians of this land and water that I live. work and play on. I'd like to pay respects to Elders both past and present and note that sovereignty has never been ceded.
This always was and always will be Aboriginal and Torres Strait Islander land.
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Today on the Money Secrets podcast, I want to talk about something that I get asked about all the time and it's how do I communicate with and get the most from working with my tax accountant. So to give you a little bit of context, I started my career as a tax accountant. I spent the first six years of my post university career working in a tax firm in Burley Heads at the Gold Coast, and I subsequently started my own tax practice, which I ran for about five years until it got too big for me to run on my own, so I sold it.
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And after that, a few years later, I actually started another tax practice with a business partner which has since closed for various reasons. Mainly because both of us were too busy to give it the attention it deserved. I tell you all of this because I actually know quite a lot about interacting with tax accountants because I used to be one.
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And all of my clients that I work with now, my small business owner clients, They all have tax accountants too. Now, something that I hear a lot, especially when I'm having discovery calls with potential new clients, is they tell me that they have an accountant, and in a lot of ways their accountant is fantastic, but they feel that they are just not getting what they need from their accountant, or they're not sure if they're getting what they should be from their accountant.
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And I think what we need to do is set our expectations. So what should our expectations be in working with our accountant? So the first thing that I want to say is almost every accountant is a really great person. They want to help you. They want your business to succeed and they want to be able to do everything they can to make that happen.
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But not all tax accountants have the skills that you might be looking for. So let's break down what a tax accountant's main role is. For your business. So your tax accountant's role is to number one, keep you compliant with the ATO. So they want to make sure that all of your business activity statements, installment activity statements and income tax returns are being filed correctly.
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Another one of their jobs is to try to minimize your tax legally. So what they will be doing is looking at your situation, trying to work out whether you are in the right structure. So that might be a sole trader, a family trust, a company, or some kind of variation of those. And they'll be trying to assess whether that is the right structure for you and or your family.
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They will be assessing you for things like what kind of risk lies in this business, and what sort of assets does this person have inside and outside of their business that we will be trying to protect. They're also looking for how much profit or taxable income you and or your family or your business structure are likely to make.
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And they'll be looking to minimize the amount of tax that you pay by maximizing what's left for you. So that is their key role, is minimizing your tax bill. Now, they do know how to do lots of other things. But let's just be clear that that is their main priority, is to keep you compliant and paying the least amount of tax required to keep you in a legal position with the ATO.
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Now, what a lot of business owners are looking for as well is coaching, guidance and support. And I will say that lots of accountants are great. At providing a little bit more mentoring and support. So, if you have an accountant who's really engaged and interested in your business, you might find that it's beneficial for you to meet with them more than just once a year.
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I highly recommend you consider meeting with your accountant in roughly May or early June. To discuss your tax return before the end of the tax year. That is a great way to make sure that you are being proactive in, yeah, maximizing the situation that you have. There are certain things that need to be done before the 30th of June to be effective in your tax return.
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So that's one thing that I recommend. Don't just see your tax accountant to do your tax return. Connect with them before the end of the financial year too. And you may benefit from meeting with them quarterly. And the sort of things that you might be talking about with your accountant might be around planning for any taxes that are coming up and making sure that you're aware of what your tax position is.
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How profitable you are, what your taxable income is likely to be, because that is something that we can try to stay on top of during the year. Another reason why you might like to get a bit closer to your accountant is if you are trying to buy a house or renegotiate a mortgage, or you're looking to buy An investment property or you're looking to expand your business in some way that requires funding.
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Your accountant will need to be on top of your books and you might find that you'll need to be getting advice from them a little bit more when you are applying for any kind of funding, a mortgage, a loan, a vehicle loan, that sort of thing. Beyond that, I would say in all honesty, there are very few accountants who can advise you about your business.
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To a really high degree outside of maximizing your net tax position and trying to keep your assets safe using the right, uh, corporate structure. There are absolutely some fantastic accountants out there who have great experience across multiple industries. Who can help you with things like cash flow planning, budgeting, forecasting, pricing.
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Just helping you to talk through the decisions that you are making in your business. But the amount of accountants who are able to do that is frankly, not many. Something that you need to know about accountants is, as I said earlier, we are really, really nice people. But, we are not known for our communication skills.
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We are not given a lot of training, perhaps a lot of accountants have received no training. In communication, especially when it comes to explaining what they're trying to do with your tax return. So your accountant will no doubt be amazing at preparing your tax return, making sure you are compliant, getting your BAS done on time, you know, all of those sorts of things.
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But explaining what they're doing to you might be something that's a little more challenging. It's like some people are natural teachers and educators and some people just aren't. My experience is that most accountants are not natural educators or communicators. So here are some ways that you can have a really great relationship with your accountant.
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First of all, you want to let them know what you're hoping for from the relationship. If you're hoping to get business advice, pricing advice, maybe even some form of business coaching, have that conversation with them up front, understand how that might work, what industries they have experience with, what coaching they've done for other clients.
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So have they actually coached another business before or is that something new that they're adding to their business? The second thing is you want to be proactive with your accountant so that your accountant will be proactive with you. If you want to have regular contact with them, perhaps it's worth booking sessions in, in advance.
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So you know, when you're meeting, you've got an idea of what you want to talk about in each of those conversations or sessions. And you feel that you're, you have that space to have your questions answered. I think the third thing is to be realistic about what you expect to pay for that service. A lot of people tell me that they feel they aren't getting everything that they want from their accountant, but they're also just paying for the kind of, you know, basic level compliance tax return lodgment and tax return advisory.
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So know that if you are going to be asking your accountant to do more than that, or if you have a really big or complicated business or corporate structure, it's going to cost more. Right? So, how to have a great relationship with your accountant. Be really clear about what your expectations are. If you want more than tax advice and compliance, talk about that.
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Understand what their skills are and who they have done that with before, so that you know whether that's going to be suitable for you. And be proactive, and be prepared to pay for the value that you are going to receive when you interact with your accountant more. Now, here are some questions that you may like to ask your accountant.
[00:10:25] A lot of people also tell me that they just have no idea what questions to ask their accountant. So, I've got you. One of the questions to ask your accountant at tax time might be, Can you please explain to me how you've put this tax return together? Have you made any decisions about Either minimizing or maximizing my tax payable this year that I should know about.
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What I notice is that a lot of accountants will be trying to minimize your tax position without explaining to you how and why they're doing that. They may be making decisions on your behalf without actually discussing those with you. And the reason why that could be important is because, let's say for example, you know that in two years time, You are going to be applying for a mortgage.
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Now, it is notoriously more difficult for a business owner to be approved for a mortgage than an employee. And we can get into that another time. But for that reason, your accountant needs to know that that is one of your goals in the next few years. So one of your goals might be maximizing your taxable income so that you are going to have your best foot forward on that mortgage application.
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Another goal may be to get as much money out of the business and into your savings account as possible, even if that comes with a little bit of extra tax during those couple of years leading up to getting that mortgage. Right? A lot of business owners. Don't let their accountants know about their goals outside of their business.
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And their accountant is there trying to minimise their tax rather than maximise their take home pay. And the two things are actually quite different. So there are different ways that you can prepare your tax return at the end of the year, which you can discuss with your accountant, that will either maximise your taxable income, Or minimise your tax payable.
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And I'm not talking about things that are illegal or dodgy. There are just different ways to prepare tax returns that will result in different amounts of tax payable. And on the flip side will also result in being able to take more or less take home pay from your business, especially if you are a company.
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So another question to ask your accountant might be, please talk me through, the structure that I'm in right now, and please let me know whether you believe that I should be considering moving to a different structure for tax purposes. Now the different structures that exist are, the main three are sole trader, family trust, and company.
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And all of those three different structures for your business will have different tax implications. and different legal implications too. What you want to do is make sure that your accountant is considering that each year. Is this person in the right structure? Is there a possibility that we might look to move them to a different structure?
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And when will we be looking to do that? Is that something we want to do now? Or is it something we want to do in the future? Because it is your accountant's job to make sure they're on top of that. But you can be proactive in that by just touching base with them every year to ask that question. Another question that you might like to ask your accountant is, Is there anything you've noticed in my books or in my tax return that you'd like to highlight?
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Have you noticed anything that has gone better or worse than it has in previous years? And if so, I'd love to hear about it. Your accountant will love having this conversation with you because as I said before, accountants really, really want to help you. They want you to have the best business that you can have.
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They want you to have a great experience working with them. So the more proactive that you are in asking questions and allowing them to help you, the better your relationship with them is going to be. So to recap, here are some things that I believe are important in terms of if you want to have a great relationship with your tax accountant.
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Firstly, be really clear about what your expectations are. Be proactive with your accountant, possibly even booking sessions in advance, and I recommend seeing your accountant more than just once a year. Third, make sure that your expectations about what you're paying your accountant match your expectations of their service.
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If you're looking for a really high level of service, that is something that you will pay for because that is the value that you are looking for. Three questions that you might like to consider asking your accountant are, number one, can you please explain to me how you have put together the tax? Was there anything you did to either minimize my tax or maximize my take home pay that I, that you could explain to me?
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Number two, is the structure that I'm currently in the best structure for me? And if so, please explain to me why. And the third question is, have you noticed anything in my books that you wanted to highlight? I think that if you can do these things with your accountant, you are going to have a much better relationship.
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The last point I want to leave you with is that there are so many people that can help you with your business. I personally am a money coach and business strategist and I tend to fill the gap between what your accountant is able to do and what you're looking for with your money. Not a lot of accountants are able to do the work that I do because it is very specialised.
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There are business coaches, there are marketing coaches, there are consultants and a wide range of different specialists and freelancers out there in the world who can help you alongside your tax accountant. Your tax accountant doesn't need to be your sole financial advisor in your business. There are many other professionals who can help you too, including me.
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And yeah, I hope that this episode has helped you really think about how to have a better relationship with your tax accountant, because they're an important person and who wouldn't want to have a great relationship with them? I'll see you in the next episode.
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Thank you so much for listening right up to the end.
I hope you enjoyed this episode of Money Secrets, where we talk about the money secrets of successful small business owners. If you enjoyed the episode, I'd love it if you'd subscribe to the podcast, but leave us a review or share this episode with one of your friends. I hope you learned something. I hope you got a new perspective and I really hope you enjoyed the listening experience.
