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August 13, 2020

What Do the Wealthy Know About Tax Time That You Don’t?

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Peter Hetherington

During tax time, you may find yourself scrambling to get all of your documentation in order. But the wealthy generally don’t have this problem. That’s because they take a different approach to how to do tax.

What does tax time look like for you?

For many Australians, it’s a mad rush. You collect every receipt you can find and hurry through the calculations to get your forms in on time. By the end, you’re just relieved to have it all over and done with.

And maybe you’ve managed to save some money on your taxes…

However, you’ve done it in a panicked way. And once you’ve submitted your returns, you may not even think about your finances again until tax time next year.

That’s not how the wealthy operate.

Financially successful people have their money on their minds all year round. In this article, we’ll reveal what makes them different to most, and some of the key things you should consider, beyond your taxes.

How the Wealthy Do Things Differently

Perhaps you’ve taken the first steps toward great financial planning. You said “yes” when you asked yourself, “Do I need an accountant?” And now you have a professional in place to help you during tax time.

That’s all well and good.

But financially successful people understand how their accountants help them with much more than tax. They work closely with these professionals to create financial plans for the entire year. Tax is often just one component of a much larger strategy that’s designed to help them grow their wealth.

The wealthy focus on making informed financial decisions all year round.

This obviously includes finding ways to save money on their tax bills. However, they also have goals that they hope to reach. For example, they may work with a financial planner to create an investing strategy. Within this strategy, they’ll determine a goal and work out which assets will help them achieve that goal. And while a tax plan will become part of that strategy, the work often extends far deeper.

The point here is that a trip to your accountant is about much more than trying to save money on your taxes.

It’s about creating a comprehensive financial plan that will help you leverage your current position to build wealth.

This is why financially successful people work with such a wide range of professionals. Beyond an accountant, they may work with a financial planner and an investment strategist. They may also work with brokers, particularly if they need insurance to protect themselves and their families.

But let’s bring the focus back to accountants.

You know that an accountant may be able to help you reduce your tax bill. However, there are many other reasons to work with them outside of tax time. These include the following.

Reason #1 – Tracking Your Numbers

If you’re a business owner, you need to keep track of your numbers throughout the year. This includes tracking revenue, losses, and available cash flow.

These will all factor into your calculations during tax time. However, failure to consider them throughout the rest of the year may land you and your business in serious trouble. Your accountant can help you keep track of everything and warn you of impending financial issues.

Reason #2 – Staying on Top of Regulatory Issues

The wealthier you become, the more complex your tax returns will likely be. This is especially the case if you have your own business and you’re also investing. This complexity means you may have more regulatory issues to deal with.

And that’s another area where an accountant can help.

A good financial professional brings expertise in these issues to the table. They’ll ensure your financial practices don’t go out of date. Plus, they can highlight potential regulatory issues so that these don’t cause legal problems later on.

Reason #3 – Saving Time

Time may be the most valuable currency in the world. Once it’s spent, you have no way of getting it back.

The wealthy understand this, which is why they do everything they can to preserve their time. This allows them to focus on activities that build more wealth.

If you don’t have an accountant, you may face huge burdens on your time. This extends beyond tax time too. You’ll be responsible for maintaining your records and budgeting appropriately. The time you spend on such activities could be going towards something more fruitful.

Reason #4 – Helping You Create Strategies

What financial goals have you set for yourself?

It’s a question that many people don’t have a strong answer for. Many simply want to save some money and try to increase their earnings. However, they don’t have a roadmap in place to help them do that. And they don’t have any specific goals to work towards.

A good accountant can help you understand exactly what you want to achieve financially. And from there, they can work with you to create strategies to achieve those goals.

This often involves bringing in other, more specialised, professionals to work with you. The wealthy leverage such strategies to build more wealth – before, during and after tax time.

Accountants Do More Than Just Tax

Many people work with accountants because they want to know how to do tax. However, this means that they’re under-utilising a professional who may be able to help them with so much more.

The wealthy understand that accountants and financial professionals can help them all year round. That’s why they have more in mind than reducing their tax bills when they meet with their accountants.

They’re thinking about specific goals they want to reach.

Perhaps it’s time you start doing the same.

Instead of just seeking an accountant during tax time, why not create some goals? Then you can arrange a consultation to discuss those goals. Your accountant may work with you to refine your goals and create strategies to accomplish them.

That’s what Modoras specialises in.

We challenge you to write down three financial goals that don’t relate to paying less tax. Then, schedule a consultation with us and we’ll work on helping you to reach those goals.

Resources:

https://docs.google.com/document/d/1GipeJlNTthNXYXL5U8XD5YS9-rS53ZCmsu8GhiwGbPw/edit

https://www.abc.net.au/life/this-tax-time-do-you-need-an-accountant-or-do-it-yourself/11196122

https://moneysmart.gov.au/choosing-an-accountant

https://www.business.gov.au/Finance/Accounting/Essential-tasks-at-end-of-financial-year-EOFY

https://www.abc.net.au/news/2019-07-01/your-tips-and-tricks-to-saving-time-and-money-on-your-tax-return/11213672

https://lumatax.com/blog/reasons-to-hire-small-business-accountant/

https://www.mckinleyplowman.com.au/community/news/5-reasons-need-accountant-business/

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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