Must Know Tax Tips For Small Businesses

Tax is the biggest expense that many small businesses face. Yet the majority of small businesses don’t have a plan in place to minimize the amount of taxes that they pay. To remain profitable and competitive, it’s paramount that your small business takes action towards reducing its tax expenses.  In this article, I will share 10 tax tips that your small business can implement:

1) Keeping your records up to date and accurate is critically important when running a business. If the taxman asks any questions regarding your taxes, you should be able to answer him with proof and records. Keep any receipts in a box.

2) If you are running your business from home, you are able to claim back a fixed sum at the end of each year, or claim expenses for a percentage of your home related costs.

3) You may be entitled to a tax free car allowance if you own a car that you use for business purposes, the HMRC will allow you in most circumstances to claim back mileage at a rate of 45p per mile for the first 10,000 miles in a business year and then 25p per mile thereafter.

4) Consider paying your partner a salary of the work that he or she performs in your business. The amount of salary paid will need to be reasonable and realistic in relation to the hours worked and the type of work. By splitting your income with your partner, the overall taxes that your business pays will be reduced.

5) If you reclaim any business expenses such as travel, memberships or subscriptions, you will need to include this in your payroll at the end of the year and also complete a P11D that details the expenses paid to you. Failure to submit a return could result in fines of up to £3000.

6) A good accountant will provide you with valuable advice and could save you a considerable amount of money. They will also advise you on which business structure is the most suitable for your business, e.g., sole trader, limited company, or partnership.

7) Put any future tax liabilities to one side to ensure that you do not come unstuck when it comes to deadline time. It is recommended that you set up a separate deposit account to keep things organized.

8)  If you don’t have the budget to hire a chartered accountant, online accounting software can save your hours of time, and things a lot easier when it comes to tax returns. You will also be able to access you’re financial records at any time, from any location

9)  If your business employs others, it is important that you understand how to manage PAYE and National Insurance Contributions when paying salaries. This will ensure that the correct amount of tax is deducted from your employees pay.

10) If you do not submit your tax returns on time, you will face an automatic £100 fine as well as daily penalty charges. Whether or not your account is given the task of submitting your tax returns, it is your responsibility if the deadline is missed or any mistakes have been made.

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