If there is one thing that all businesses hate, it is paying tax! But, unfortunately, we all need to do so. Nevertheless, this does not mean that you cannot cut your tax bill. There are many companies that are paying way more tax than they need to be. With that being said, read on to discover some top tips on how every small business can reduce their tax bill.
- Pay yourself efficiently – First and foremost, you need to ensure you pay yourself in the most tax efficient manner. It goes without saying that the way you pay yourself will influence the amount of tax you are responsible for.
- Hire an accountant – There are many accountants to choose from, and you should definitely take advantage of their services. An accountant will ensure that you are taking advantage of all taxes that are available to you and that everything is handled above board. You should look for an accountant that provides fixed fee accountancy services, as this means you will pay a set amount on a monthly or quarterly basis, ensuring no nasty surprises when you get the bill.
- Be organised – One of the reasons why a lot of people end up paying too much tax is because their books and such like are not in order. Not only does this make it difficult to file your tax return, but you also need to have documents of everything encase the HMRC decide to look into your taxes.
- Take advantage of benefits – There are many different tax-free benefits for startups that can be taken advantage of. This includes tax-free childcare vouchers and the cycle to work scheme. With the latter, not only can you make tax savings, but also 25 per cent can be saved on the price of a new bike.
- Know your VAT – This is another area where a lot of business owners are missing out. There are many companies that are paying far too much VAT. One reason for this is because they are using the wrong accounting scheme. There are various schemes to choose from, and one that is certainly worth considering is the Flat Rate VAT scheme. Under this scheme, you will pay a single, flat rate of VAT on your turnover. The flat rate you will pay depends on the industry you are in. However, this is often a great way for businesses to save money.
- Know your industry – Last but not least, it is important to get to grips with your industry. There are often special allowances and dispensations approved by HMRC for certain sectors yet it is not uncommon for small businesses to take out a loan to help them grow when they could have found some spare cash by claiming relevant reliefs. If you don’t stay in the know, you won’t be able to claim for any of these.
All things considered, if you take note of some of the tips that have been provided above, you are sure to reduce your tax bill by a considerable degree. We all want to pay less tax but it is vital that you do so the right way. So, hire an accountant and get to know your industry better.