Taxation can seem a strange and bewildering topic, especially if you’re not naturally good with numbers and systems. But if you’re running a business, it’s worth getting acquainted with the basics. It might be that there are easy wins to be found, and that with the investment of just a little bit of time and energy, you stand to save substantially on your overall bill.
But what can small business owners do to make tax more manageable?
Keep Accurate and Organised Records
The more up-to-date and accurate your records are, the easier it will be to file your taxes. You’ll be able to understand immediately how much you earned, and how much you owe.
The right record system might also help you to demonstrate your earnings to HMRC, when and if you come to be audited. A good system for record-keeping will also allow your business as a whole to reduce its administrative costs, and make better decisions when it comes to finance.
Maximise Your Deductions
When you’re filing tax, you’re entitled to deduct certain costs that you incur as a result of running a business. This can help to drive down the amount you pay. Keeping track of spending on office expenses, like printer cartridges, and money paid for business-related social events, like lunch with clients, can be invaluable. If you have a digital way of doing this, then the administrative costs of totting up these small expenses can be vastly reduced.
Understand Your Tax Obligations
As a business, you might be expected to pay corporation tax, capital gains tax, and VAT. These are the major categories – though more specialised ones might also apply in particular industries.
It’s essential that you understand when you’re due to submit, and what taxes you’re liable for. For example, if you’re paying tax, you might be expected to submit a CT600 form with HMRC.
Plan for Quarterly Tax Payments
Making quarterly payments will help you to avoid making large payments, and running into cash flow issues as a result. You’ll also stand a better chance of avoiding penalty charges.
Consider Hiring a Tax Professional
We’ve barely scratched the surface of taxation for business. It’s a complicated topic – and some businesses might have specific tax issues to think about. For this reason, it’s worth bringing in outside expertise.
A good tax consultant will be able to inspect your books and review whether any savings can be made. They’ll also offer advice that will make your accounting processes more resilient, and your company less vulnerable to auditors.
Tax is something that specialist companies and individuals spend considerable time and energy on. If you’re running a small business, it’s worth taking advantage of this, and leaving yourself free to concentrate on day-to-day operations.
