True freedom is a freedom with clear boundaries. True freedom understands the real essence of do’s and don’ts. A freedom without restrictions that brings comfort is a freedom in chains.
― Ernest Agyemang Yeboah
This salary should cover all your own needs, mortgage, holidays, supermarket, movies and whatever you need for your family. It must be sensible – not too tight that you just start drawing from the company again, but also not to grandiose and beyond the business’ ability to pay.
Make sure that your partner and family know about the changes and get them all on side.
This helps with transparency with your businesses. Businesses that shuffle money around accounts create havoc for bookkeepers and accountants. We want a way to get the accounts completed quickly without any delays, so you can stay on top of the business, and most importantly, as you will understand identify the cash profit.
You really need to understand what is going on. Especially the cash position of the business, know its needs and what is left over, and remember this is after your salary.
I will explain later, that you actually pay a lot of tax, to pay off the tax debt, (see our paper on tax debt) so this is important for you to know where you stand with the Australian Taxation Office. You are looking to see your integrated client account, the income tax on your structure and your personal position.
And also, make sure that your super debt is all paid up.
When you form a company the business will only pay for business expenses, and you receive a wage or salary with PAYG and your super paid. Or you will make these changes now in the company you are in.
The problem with undeclared cash is, generally you have to blow it, and you can’t build assets with it. But in our program, you will see that there is a lot of ways that tax is minimised, and you can build wealth knowing that the money has been legally sifted through the system.
Once you have completed this we can move to part 3
Read more: The nature of Tax Setting you and your business on the road to tax planning – Part One
