Following on from our last blog on Provisional Tax. The next deadline for provisional tax is just around the corner.
How profitable is your business this year?
Preparing your provisional tax return is a good time to assess the profitability of your business. Ask the questions:
Is the business making a profit?
If your business is making a profit at the end of July 2013, this is a good sign for the year end results. Does the profit fall within the targets you have set? Consider the budget you have for the year and whether you are going to be able to maintain or improve your profits. Set new targets.
Is the business making a loss?
A loss in your income statement may be great for saving tax but a loss is not what you want. Rather make profits and save for the tax. One forced saving is paying provisional tax. Turn the loss into a profit by tackling the tough questions. What is causing the loss? Don’t look at the obvious indicators e.g. fewer sales. Dig deeper. Why is income not covering your fixed costs? Are the markups on products correct to cover both fixed and variable costs? Is your marketing team performing? What expenses can be cut? What expenses need to increase to bring in more income? Now is a good time to turn the company around and work at making a profit for the year.
What is our strategy?
Use this time of preparing provisional tax as a strategy tool to assess profitability for the year. Correct your budgets and targets.
Your business can make profit