For Business Owners, it is best to keep on top of your tax and cashflow during the year, this allows you feel more in control and place your business in good stead especially when it comes to applying for finance on new and used equipment.
Getting into arrears with your tax can jeopardise the future of any business, it is a major cause of concern and can result in businesses going into liquidation. In fact, it is the number one cause of liquidations cases which are managed by the Australian Tax Office (ATO).
If you know you have a tax debt and are wanting to finance additional equipment for your business, it can become a trickier when applying for finance. Especially on larger and more expensive assets above $250k. Especially if you want to secure approvals with major banks.
Major banks will require ATO Portals to be supplied and have very little debt sitting in your Integrated Client Account. Put simply if you are not paying your Tax Commitments, banks will question whether you can pay you meet your next finance commitment.
However, at Yakka Finance there are many other banks and lenders comfortable in lending to businesses with outstanding tax debt. We do it all the time!
If you do start to fall behind, it is imperative to get on top of your Tax Debt sooner rather or later if you want to stay in a favourable light with the major banks.
We have a range of successful finance solutions that can rid of your tax debt quite quickly.
Three Successful Tips to get on top of your Tax Debt include:
Sale and Leaseback on Assets (Trucks, Plant & Machinery) you own outright in your Business
Simply put, a sale and leaseback allows a company to sell back their asset that they already own to a lender/bank in return for a lump sum cash sum (normally the fair market value of the asset). The bank/lender then puts the company on finance repayments over an agreed period of time (3-5 years) to pay the loan back. The company gets to keep the assets in the business, generating an income without having to sell them off to pay the tax debt.
Arrange a Business Loan to pay off the Debt rapidly and go on more manageable repayments
For many Talk to your Accountant and go on a Payment Plan to Start Paying back the Tax Debt. A structured payment plan is much better than going into arrears
Good businesses can become unstuck when they receive their second-year provisional tax bill. Money is often spent investing in start up costs, running of the equipment and wages, often there may be little to no further funds on hand to pay a tax bill that comes after a full year’s profits are realised.
Cash flow is the primary driver for maintaining a healthy business during its initial years. Financing equipment can help protect your cash funds, the idea is you avoid paying cash up front for equipment that is going to deliver it value over time, whereas financing can help spread the costs over time.
Interested in learning how you can get on top of your tax debt or need a funding solution whilst you still have Tax Debt. Please give Scott Rumble a call on 0401214427 to discuss your options.