The cost of paying less tax is about opportunity cost. What do you miss out on when you focus too hard on saving tax?
Opportunity Cost of Saving Tax
This episode is not about the opportunity cost of saving tax but the opportunity cost of making the saving of tax your main focus. But of course that is far too long, so we had to shorten it.
This is what Ian McLean of Bush AgriBusiness will discuss with you in this episode.
Here is what we learned but please listen in as Ian explains all this much better than we ever could.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
Long Term Costs of Paying Less Tax
The advantages of saving tax are obvious. You save tax and then you save the compound interest on that amount as well. Minimising tax might help you to survive. So what is so bad about it?
Minimising tax is not bad. It is your well earned right as a taxpayer. What is bad is when your main focus is to save tax. Then you easily lose sight of the road ahead and stunt the growth of your business.
The aversion to paying tax is not unusual. But according to Ian it is particularly pronounced among farmers. Maybe the reason is the lack of separation between the business and the individuum and living on the farm.
To grow your business you need to have a growth oriented mind set. And part of that is to see tax as a measure of success. The more successful you are the more tax you pay. So paying tax is a good thing. It means you are going places.
Along with the aversion to pay tax often comes a lack of discipline around cash withdrawals. Not paying proper wages but just withdrawing cash from the business account makes it hard to budget and be disciplined.
So pay all working family members a proper wage.
There are things you can do to save tax that won’t affect your growth mindset. That don’t require your ongoing attention. They are mainly around your business structure. And that is a one off. You do it and then you focus on running your business again.
Structure well. Let it dwell.
Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 24 August 2021