There are number of different strategies adopted by businesses to maximize their profits while concentrating on minimizing business expenses. From all these different strategies, one important way is to plan all the business expenses in such a way that you minimize your tax liability which ultimately results in higher profits.
Tax deductions are the amount of expenses incurred as part of your business and which are allowed to claim as deduction from your taxable income. So it is very important to plan all the business expenses according to applicable rules and regulations otherwise you cannot get any benefits from these expenses even if they are part of your business operations.
If you are in Australia, you can find all the details about claimable expenses on the Australian Taxation Office (ATO) website. Some of them are discussed below
Travel & Vehicle Expenses:
The travel and vehicle expenses incurred during the course of business operations are claimable, but there should be a proper record for all the related expenses. For example, if a company uses its own vehicles for traveling and transportation, then all the maintenance and fuel expenses are allowed to deduct from your taxable income.
So it is very important to keep record of all the traveling expenses incurred during the course of business to attain maximum tax deductions.
Staff Salaries and Wages Expenses:
All the staff salaries and wages of business entities are allowed to be deducted from the total income to get the actual taxable income. Salaries and wages include all the basic pay, commissions, bonuses and any other special benefit allowed to employees.
Hence, there must be a proper payroll register with all the necessary documents so that the business can claim the available deduction at the time of tax return.
Uniform and Laundry Expenses:
The expenses incurred related to purchase of new or special type uniform for employees for working on the field are claimable. You can also claim any expense incurred on laundry and dry cleaning of your employees uniform. To claim these expenses you have to keep all the bills and invoices coming from your suppliers.
Expenses Related to Equipment and Tools:
Businesses must keep all records of equipment and tools purchased for business purposes as they are claimable against your total income. It may include the depreciation expense computed on the value of fixed equipment.
The cost of supplies used to help in running business operations is claimable;for example, cleaning supplies used in hospitals. There are different rules for claiming supply expenses in the tax return by every country. So business should plan their supply expenses accordingly to get most of the benefit in tax deductions.
Claimable Taxable Expenses:
Business owners also pay different kind of taxes during the year in the normal course of business. These expenses are allowed to be deducted directly from the business net income. It may include the silence fee, regulatory fees and taxes and employer share of FICA, FUTA and other state taxes. As every country has their own rules for deductible expenses, so you should study or consult a tax consultant in your niche to help you in understanding all the deductible taxes allowed in the industry you are conducting your business activities.
Transportation industry and car transportation companies are most prone to fluctuations in their variable costs due to frequent variation in fuel prices. Accounting for transportation companies, for this reason, gets complicated often times. Accounting for a business in itself is an entirely different field of work and requires thorough understanding of jargons and other concepts to be able to enter transactions and do the bookkeeping.
Even after studying the basic principles of accounting, it is advisable to hire an accountant for your business. An accountant will be of immense assistance in improving your transport business and achieving your goal of profit maximization and expense minimization. Given your field of work, an accountant can help you in the following ways:
- Bookkeeping: An industry specific accountant will keep close tabs on all invoices, bills of lading, purchase orders, driver logs, fuel tickets, timesheets and other relevant shipping documents. Along with audit of invoices at transaction level, the accountant will also book the entries for all your transactions. This transactional level audit will ensure that no errors are made such as incorrect freight charges (over-billing or under-billing) and help you maintain the budgeted revenue. Other documents regarding vendor information, consignment, rate contracts will also be maintained and entered into the accounting system by the hired accountant. All this hectic procedure and processes managed by a third party accountant will spare you more time to focus on business growth and expansion.
- Expense minimization: An accountant that has worked with several clients in the industry has a vast experience in regards of management of cost of goods. They will assist you in analyzing your fixed costs as well as variable costs and plan a better strategy for your cost management to reduce as much expenses as possible. A specialist accountant in your niche is equipped with the necessary knowledge to analyze all relevant deductions for interstate travel, car transport Melbourne to Brisbane for example that general accountants cannot identify. An account in your business niche is also well-equipped with taxation policies and will ensure to claim as much tax breaks (deduction, tax credit or tax rebate) as possible in your stance. Getting your tax returns filed with an accountant specializing in your industry will benefit you immensely in respect of minimizing expenses.
- Reports and analysis: Due to a serviceable exposure to the transport industry, a third party accountant will not only maintain your books and accounts accurately but also prepare analysis and reports on changes and trends in revenue and strategies to improve your business processes. They will see to it that you get the best carriers, discounts and best quality suppliers in the industry. A variance and financial analysis will also be performed to compare and measure your business performance as compared to other transportation companies which will assist in a better financial planning.
- Technological assistance: Third party accountants also facilitate up to mark technological equipment and accounting software for their clients like transport management system (TMS). TMS is a platform that lets you manage and optimize the daily operations of your accounting fleet. This will eventually lead to fewer errors since it manages the major tasks such as planning, execution and optimization of movement of goods by the transportation fleet.