Running a small business can be exciting and certainly rewarding, but it also comes with certain responsibilities you cannot avoid. With so much to do, keeping up with filing taxes may easily slip out of mind, but this is something essential to avoid fines and maintain your business’s reputation.
Here is where optimising your tax strategy can save you time, money, and stress. Of course, the first step is to always work with a specialised accountant. However, some straightforward tips can help you navigate this aspect of running a business. Learn more below.
Claim Every Allowable Expense
When it comes to file taxes, it is important not to miss out on deductions you are entitled to! Many business owners overlook everyday expenses like office supplies, utility bills, travel costs, as they may seem little—but these can certainly add up over time!
However, the government clearly outlines what you can claim as an allowable expense. To optimise this advantage, keep accurate receipts and organise them into clear categories – you might be surprised at how much you can claim!
Choose the Right Business Structure
The way your business is set up can affect the amount of tax you pay. This is not to say that a certain structure works for every business! In fact, operating as a sole trader, limited company, or partnership each has its own tax advantages and responsibilities.
So, if you are in the process of starting a business or overhauling an old company to be more efficient, be sure to consult an accountant to make sure you’re set up in the most tax-efficient way for your needs.
Stay on Top of Important Deadlines
Missing deadlines can lead to unnecessary penalties, which can affect both your business’s cash flow and reputation! Crucial dates will depend on your business’s structure, but some main ones include the Self Assessment tax return deadline, Corporation Tax payment deadline, and the VAT returns deadline if you’re registered.
You’ll also want to keep up with the latest changes in how taxes are filed. For instance, you should be aware of the mtd deadline for submitting digital records and returns. Keeping a calendar or using accounting software can help you stay organised and avoid last-minute errors!
Use Tax-Efficient Pension Contributions
Putting money into a pension can certainly help you save for the future and build a safety net you may need, especially if you are self-employed. But this strategy is also a smart way to reduce your current tax bill!
In fact, pension contributions can be counted as a business expense, which means that you can deduct from your taxable profits, effectively lowering the amount of tax you pay. So, be sure to work with an accountant to explore workplace pension schemes or private pensions to find what works best for your business.
Conclusion
Tax doesn’t have to be complicated. By following the simple tips we have seen above, you can save more and make your money go further. Plus, the right strategy can save you precious time and energy that you can reinvest into running your business!
