Staying on top of tax is critical for businesses – not only so that they are aware of what they have to do and when, but also to ensure that they aren’t paying more tax than they need to. For SME owners trying to concentrate on running their business successfully, this is not always an easy task. With the July self-assessment tax deadline fast approaching, now is a good moment to look at some of the key things small businesses need to bear in mind to make sure they are managing their tax affairs effectively.
Here are our top 10 tips:
1. Submit on time
The tax calendar is stuffed full of deadlines for making payments and filing forms – some of which may be specific to your company. Organisation is key to making sure all submissions are made on time – failure to do so can result in hefty penalties.
2. Accountancy advice could pay for itself
An accountant may be an expense, but they’re often worth their weight in gold. A good accountant can advise you on key deadlines, and save you money by ensuring you’re claiming all the allowances you’re entitled to and using tax-saving techniques like the flat rate VAT scheme, if appropriate.
3. Create visibility with software support
Using the right software can help improve financial efficiency and visibility for owners and managers. Online accounting tools can help SMEs manage expenses, payroll and invoices, as well as keep tabs on cash flow, tax deadlines and help calculate bills.
4. Good housekeeping is vital
Retaining receipts and invoices for expenditure as well as income is essential – failure to do this basic housekeeping could mean that HMRC won’t allow you to claim back expenses and could ultimately lead to a higher tax bill.
5. Allowances – know your limits
Find out about any industry-specific allowances available for your sector, as well as general expenses that can be reclaimed against corporation tax such as travel, subsistence and mileage.
6. Plan ahead for investing in equipment
Investing in up-to-date equipment can be vital for business success, keep an eye on the Annual Investment Allowance which might be reduced next year. Planning major capex in advance is essential, so it can be timed and structured in the best way to mitigate costs against tax and minimise pressure on the bottom line.
7. Make working from home work for you
If you work from home there are various ways you can reclaim a proportion of costs such as utilities bills, council tax and other property costs – be aware that significant claims could incur a CGT bill when you come to sell your house.
8. Use up personal tax allowances in family businesses
As well as using up your own personal tax allowance, other family members working for the business can also use theirs. This is most likely your spouse if they are doing relevant activities such as bookkeeping or marketing, older children helping with things like IT support or web design can also benefit.
9. Benefit from staff perks
Offering some staff benefits like childcare vouchers or participating in the “cycle to work” scheme is not just employee-friendly – it can also bring tax benefits for employers too. Businesses providing access to these “salary sacrifice” schemes can save on national insurance bills too.
10. Consider spreading the cost of VAT to ease cash flow
The requirement to pay VAT on invoices raised rather than bills paid can often be tricky for businesses to manage. Looking at ways to smooth payments out across the year through monthly finance arrangements can help ease the pressure and minimise the risk of non-payment
Like many aspects of running a business, being well organised is the best way to stay ahead when it comes to tax. Getting the right support – from professional advice to funding provision - can be vital.
Get in touch to find out how we can help your business.
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