Tax-Saving Tips for Small Business Owners

Anyone running and owning a small business will tell you this one thing “be careful with tax – it’s not straightforward!”, in fact, it can be a real minefield for the unprepared. However, taking time and working closely with a good accountant (DNA Accountants), will ensure you do not get yourself in trouble with HMRC and should result in some tax-saving.

The key to tax-saving is to stop and think, look at your business from every angle and to ask yourself are yourself “Am I doing everything I can do to save tax?”, these questions will help you along…

  • Are you really the best person to do your bookkeeping or VAT returns?

Your business will benefit from you spending time working on it, whilst letting the bookkeepers and accountants do what they do best. For what you may think you are saving in fees you are probably losing out by not claiming for everything you are entitled to.

  • How well do you know your VAT?

VAT is a common area where business owners are losing out. Are you paying the right amount? Have you looked at the Flat Rate Scheme? Many businesses are unaware of the Flat Rate VAT scheme, but for the right business, it can be an unexpected source of profit.

  • How closely do you work with your accountant?

Business owners often complain about their accountant and how they have too much tax to pay. The truth is that the business owners who regard their accountant as trusted advisors and someone who can help them save tax are often the ones who are paying as little tax as possible. If you don’t talk to your accountant; change accountant.

  • Are you claiming all the expenses you should?

HMRC allow generous tax savings for self-employed businesses that spend time working from home. Make sure you are aware of them. For businesses that use a dedicated room in the house for work, the ‘Use of Home’ claim can be very generous indeed.

  • Are you passing on tax-saving to your staff?

There are several tax-free benefits that can be paid to staff to save both you and them tax. For example, the “cycle to work scheme” has been in operation for several years and can save up to 25% of the cost of a new bike, as well as making a tax-saving. Also, tax-free childcare vouchers are also a great way to save tax, as well as being a tax-free benefit to staff.

  • Are you paying yourself efficiently

The amount you pay yourself from your business obviously has an impact on the amount of tax you pay. How 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. Also, dividends can be a great method of paying key people within the business, but care needs to be taken so not to fall foul of Company Law, and ultimately HMRC.

  • Are you organised?

A common reason for HMRC to disallow expense claims is a failure of the business to keep proper supporting records. Don’t fall into that trap.

  • Do you have the business support you need?

Even a sole trader can have a good team to call on. Make sure you have a trusting, approachable accountant.

If you are still feeling a little nervous about your business tax-saving, get in touch with us here at DNA Accountants, we’re not afraid of taxes!

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