Tax Planning Advice - Practical Tips for Tax Payments

There are many aspects to accounting and many aspects of running a business. One of these many areas is planning for tax payments.

Most small businesses and companies are liable for corporation tax, VAT (sales and purchase tax) payments and employer related payments. Company directors and business owners are also liable for personal income tax. Tax payments can be large and for some entities can struggle to pay their tax liability. For this reason, I have written this short post and have uploaded my Tax Planning Advice video. My tips are very practical and are nothing out of the ordinary - just some simple practical tips to help you plan better for tax payments.

Practical Tax Planning Tips

1. Do your bookkeeping

My first tip is to keep your accounts up-to-date - do your bookkeeping! Keeping a simple bookkeeping spreadsheet can show you the running profitability of your business. Alternatively, accounts software can produce a profit and loss statement by clicking a button. Knowing an estimated profit figure of your business can give you a ballpark tax liability figure. If you know how much your tax is going to be in advance, you can start saving and planning for the tax payment(s).

You can learn how to create a simple bookkeeping spreadsheet here.

2. Do not delay giving your accounts to your accountant

Once your year end or tax year is over, give your accounts to your accountant. Most tax authorities allow anywhere from 6-18 months to make tax payments in full after the company year or tax year end. Having your accountant calculate your tax liability and file your tax return as soon as possible allows you to make the most of the time to pay - it is much easier to pay a tax bill within 6-18 months than to pay a bill with only 1 month left of your allowance!

3. Start a personal tax payment savings account

Every time you draw money out of your business or company, place a percentage of that amount into an allocated bank account. By the end of the tax year, you should have a good amount saved to put towards your tax bill. A common reason for not being able to pay a tax bill is that money was not put aside for the tax payment i.e a lack of basic tax planning.

4. Open a business reserve account

Similar to my previous tip, it is worthwhile having a business reserve account. A percentage of sales/turnover can be placed in this account and used for future business tax payments.

5. Create a cash-flow forecast

Even the most profitable of businesses can have cash-flow difficulties. Managing, planning and budgeting cash can have a huge impact on being able to pay your tax liability on time.

You can learn how to create a cash flow forecast here.

6. Speak to your accountant

Your accountant is there to help. If you need a cash-flow forecast created or need advice on how much to put aside each month for tax liability, then contact your accountant.

If you need an accountant, then contact me at

7. Contact your tax body

If all else fails, speak to your tax authority. Some tax bodies will allow you to pay in instalments or may be able to extend payment time by a short period.

Below is my video that is coupled with this post...