Tax for small businesses can be a bit of a minefield for those who aren’t familiar with the different processes. Taking some time to learn a little bit, along with talking to your accountant can result in finding ways to save some tax in the long run. North Wales accountants know the area of tax for small businesses very well, and are equipped to help you will all your tax and business related accountancy needs.
Here are some of the best ways in which small business owners can look to pay less tax.
Know your industry
Stay up-to-date with the latest news and events from the trade body associated with your business, read the industry newsletters and stay in the loop. A number of industries have special dispensations and allowances which are approved by HMRC, such as a uniform allowance – your trade body or union are on your side, make sure to use them.
Spend more time on your business
You need to carefully consider if you are the best person to do your business bookkeeping or VAT returns. Your business will benefit from you spending more time working on it, whilst letting professional bookkeepers and accountants do what they are trained to do best. For what you might be saving in fees from the professionals, you are probably losing out by not claiming for everything you are entitled to.
Talk to your accountant
Business owners will often spend hours complaining about their accountant, and about having too much tax to pay. The truth is, business owners who regard their accountant as a trusted advisor and someone who can actually help you to save tax are often the ones who are paying as little tax as possible. If you don’t have a good working relationship with your accountant, it’s time to change. Try accountants North Wales for all your business tax requirements.
Working from home
HMRC allows generous tax savings for self-employed businesses that spend time working from home. Ensure that you are fully aware of them. Most businesses out there claim a modest use of home charge of just £2 per week, but HMRC actually allows you more than that. For sole traders who work from home, HMRC allows a much more scientific method for calculating what expenses you can deduct from the use of your home.
If you are a self-employed business owner, you can claim for a proportion of the following home costs:
- Council tax
- Mortgage interest
- Insurance
- Heat and light
- Water
- Landline and phone costs
- General household repairs and maintenance
For businesses who use a dedicated room in the house for work, the ‘Use of Home’ claim can be very generous indeed.
Pay yourself efficiently
The amount that you pay yourself from your business obviously has an impact on the amount of tax you pay. The way in which you pay yourself can also have a significant impact. Salary, dividends, benefits in kind all need consideration on an on-going basis.
A common benefit in kind is the use of a company car – each case needs to be considered on a case by case basis, but generally business owners can save tax by having a company car. Due care and diligence needs to be used here, as HMRC should be promptly notified when employees receive a company car, as this will avoid a nasty tax bill at the end of the year.
Get organised
Even if you won’t be doing the bookkeeping yourself, you can help to make sure that you are claiming for everything you are entitled to by keeping copies of everything. A common reason for HMRC to reject expense claims or input VAT amounts is a failure of the business to keep proper supporting records.
