The impact of income tax on costs and decision making, explained by our business accountant in Melbourne
Our business accountant in Melbourne identifies that it is very important for managers to consider the impact of income taxes on a specific decision. Usually, any costs that are incurred when operating a business are tax deductible and any revenues generated by a business are taxable. Our Melbourne small business accountant have detailed the effect of tax on business in the paragraphs below.
Firstly, our Melbourne small business accountants believe it is important for you to note that the form of a transaction may impact the amount of tax that is paid or is deductible. For example, leasing a building, followed by rent payments has different tax effects than actually purchasing the building. Although rent and depreciation are tax deductible, the amount of depreciation will vary. However, if the building was purchased, most governments will assess property tax on the building whereas a leased property can escape that type of tax.
Our small business accountants in Melbourne CBD also want to bring to your attention that the payment of taxes requires a cash outflow and reduces the amount of cash available for other purposes in a business organisation. Sales taxes and property taxes however, are generally deductible in calculating income taxes owed by businesses.
For more information regarding the impact of income tax, please contact our business accountant in Melbourne today.