Tax forecasting

Tax Strategy

The need to predict and control business costs runs through every business level. And this same need for control applies to taxation as well.  Suppose you are operating your business or your investment portfolio, and your tax liabilities come as a surprise (or shock). In that case, you are not in control of your overall financial position.

Tax is a business cost – and tax forecasting is part of a business process.  Likewise, tax forecasting and tax strategy for a families wealth position requires careful tax advice.

A primary driver for a family’s wealth and success is taxation.  And smart, documented, tax advice with a long term view of a family’s asset structuring is important to ensure that the long term tax impact is considered as part of the overall strategy.  A strategy that does not give direct tax advice is, in our opinion, fundamentally missing one of the most important drivers for business wealth – your private consumption comes from after tax dollars.

At Westcourt, we view taxation as just another controllable (within a range) business and investment cost with the ability to forward a plan that cost. So, the ability to forecast and predict your tax liabilities is a matter of conversations, understanding your affairs and giving you real-time tax liabilities and payment dates.

The use of cloud accounting, monthly accounts and monthly reports with a deep and clear understanding of tax law can give a business family a proper understanding of their net profit after tax – and the ability to forecast your tax liabilities. And this clarity of taxation and the forecast tax cost will allow decisions on the use of funds over time.

This tax forecasting coupled with tax structuring options creates a forward-looking approach to taxation, finance and accounting that is unusual among accounting firms. It comes from a knowledge of superannuation laws, base rate entities within a company structure, and small-business capital gains tax concessions – but ultimately, our tax prediction ability is unique among families and our unique approach.

If you then couple our tax forecasting approach into your forward cashflows you are able to clearly understand capital expenditure positions, debt reduction strategies and dividend payment options to get the most out of your business to support your family and deeper life goals.  And that forecasting of your cashflow, including tax obligations, can also then be incorporated into forecast balance sheets and forecast profits.

The decision to engage Westcourt on an ongoing basis will give you control over your tax liabilities. We deliver on our single promise because we have a single focus – families in business – without a need to cross-sell an ever-increasing range of services. And coupled with our deep international connections and technical knowledge, we are well suited to help commercial families that own well run businesses become great – why not give us a call?

Frequently Asked Questions

Forecasting tax liabilities involves estimating the amount of taxes that a business or individual is likely to owe in the future based on their current financial situation and future projections. Here are some steps that can be followed to forecast tax liabilities: 

  1. Review current financial information: Review your current financial information, including income, expenses, and other financial transactions, to get a clear picture of your current tax situation. 
  2. Project future financial information: Project your future financial information based on your business or personal plans and goals. This includes estimating your future income, expenses, and other financial transactions. 
  3. Determine tax laws and regulations: Determine the tax laws and regulations that apply to your business or personal situation, including any changes that may be coming into effect in the future. 
  4. Calculate estimated tax liabilities: Use your current financial information and future projections to calculate your estimated tax liabilities. This may involve using tax calculators or working with a tax professional to estimate the amount of taxes you are likely to owe. 
  5. Review and refine: Review and refine your estimated tax liabilities regularly, taking into account any changes in your financial situation or tax laws and regulations.

Forecasting tax liabilities is an important step in managing your tax obligations and ensuring that you have the funds available to pay your taxes when they are due. It’s a good idea to seek advice from a tax professional if you are unsure about your tax obligations or if you need assistance forecasting your tax liabilities. 

Forecasting in business can provide many advantages, including: 

  1. Improved decision making: Forecasting allows businesses to make informed decisions based on accurate and up-to-date information about their financial situation. This can help businesses to identify trends, respond to changes in the market, and make decisions that support their growth and success. 
  2. Better planning and budgeting: Forecasting can help businesses to plan for the future and create realistic budgets that are based on accurate projections of their financial situation. This can help businesses to allocate resources effectively, manage their finances more efficiently, and achieve their goals. 
  3. Increased financial stability: Forecasting can help businesses to identify potential financial risks and take steps to mitigate those risks. This can help businesses to maintain financial stability and avoid financial difficulties. 
  4. Enhanced competitiveness: Forecasting can help businesses to identify opportunities for growth and innovation, and to stay ahead of the competition by adapting to changes in the market. 
  5. Improved communication: Forecasting can help businesses to communicate their financial situation and future plans to stakeholders, including investors, employees, and customers. This can increase transparency, build trust, and support the success of the business. 

Forecasting is an important tool for businesses of all sizes, and it can provide valuable insights into the financial health of a business and support its growth and success. It’s a good idea to seek advice from a financial advisor or a business consultant if you need assistance with forecasting in your business.

Yes, you can create a three-way forecast using only Microsoft Excel and Microsoft Word. And it might take you a very long time in getting it right.  A three-way forecast typically involves forecasting future financial results based on three different scenarios: best case, most likely case, and worst case. 

Excel is a powerful tool for creating financial forecasts, and it can be used to create detailed financial models that incorporate multiple scenarios and assumptions. With Excel, you can create a three-way forecast by using formulas to calculate projected results based on different sets of assumptions, and then using charts and graphs to visualize the results. 

Microsoft Word can be used to document the assumptions and methodology used in the forecast, and to present the results in a clear and professional manner. You can use Word to create reports and presentations that explain the key elements of the forecast, including the assumptions and calculations used to create the projections. 

While it is possible to create a three-way forecast using only Excel and Word, it may be useful to consider using additional tools, such as Futrli or Calxa software, to streamline the process and ensure that the results are accurate and reliable. Additionally, you may want to seek advice from a business accountant like Westcourt if you need assistance with the forecasting process.