Case study: creating the right strategy for your business

We want to share a case study on how we’ve recently been helping a business client make sure they have the right financial strategy in place for their unique business needs.

This client has a great accountant - but she knew they needed some extra help looking at the specific requirements of their business to get them on the right path - that’s where we come in.

The first important thing we factor into every plan we create for new clients is that every business operates a little differently. For these business owners, their profits fluctuate seasonally - some years they may make a nice $300,000 - $400,000 profit and other years they may only break even.

With that in mind, we made sure we had a clear strategy to claim certain expenses at certain times to achieve the most tax savings. For example claiming more in entities like Super some years or pre-paying expenses in others to work with the business’s fluctuating profits.

We also looked at where certain expenses were being claimed. For example super can be claimed in a range of ways, from personally to through the company or through a trust. For these clients we decided to vary where we claimed their super year-to-year depending on the business’s income and which strategy would deliver the best result for them at the time.

Another strategy we used was franking credits. Franking credits are the tax you’ve paid on your company’s profits previously - and are a powerful tool for creating wealth. We worked with this client to decide how to use franking credits, when to use them and when to declare dividends.

Over the last 3 years we’ve had this strategy in place, our clients have received $40,000-$45,000 back in personal tax refunds from their franking credits, and effectively they’ve regained some of the tax paid by their company in the past.

We’re really happy with where these clients are at - for them and many other business owners, it’s all about having the right wealth creation and profit strategies in place for your unique situation. If you want to explore any of these ideas for your business, please reach out at www.financialedgegroup.com.au to set up a chat.