For small business owners, it is quite stressful to run a business and handle this particular tax area to grow business. You can save your money on the tax with the help of tax breaks and reliefs. To pay less or get tax deductions, you should be aware of rules and regulations. Here we provide some tax-efficient tips or tax planning ideas for small businesses that will help you to enhance your business and save your money on tax.
Plan your next year taxes on time
You must keep your books up to date, don’t leave your tax return and accounts to the last minute; it will only make you panic and stressed. As a result, you will make mistakes and lose the opportunity to save tax. In this case, HMRC will refuse the expense claim and hold you responsible. You must check all the expenses and sources of income before you claim otherwise you can face a penalty, instead of saving tax money.
Tax planning software
You can use tax planning software, and small business owners must omit the mistakes and go with tax software like Quickbooks & Turbo Tax. When you file a paper return, then it will lead to some mistakes, it is better to avoid the errors and file your tax return online. It will be beneficial for you to spend more time in your business and keep proper supporting records. If you are not aware of how to use the software and can’t handle the bookkeeping on your own in this case, you can hire a professional accountant for your small business to save tax money. Otherwise, you will end up paying more tax.
Auto & Travel Expenses
If you travel to and from for your business, then you can deduct such expenses from your taxable income, but this should be only for business reasons. Most people work from home if you travel from home to the workplace, then you are not eligible to deduct expenses because HMRC will not consider it this travel should be from workplace to workplace.
Another expense that you can deduct from your taxable income is auto expense if you use your vehicle like a car or truck for business purposes then you can claim expenses such as parking, gas, repairs, etc. You must keep a mileage log to justify these expenses and draw a clear line between personal and business use to claim tax deductions. Claim tax relief if you are spending your money on travel or anything you buy for your business.
Know your Vat
You must make sure to deal with your VAT correctly as it impacts your business. You should be aware of the VAT rate applicable to your industry & you are paying the right amount. Look into Flat Rate Vat Scheme to gain profit and benefit from voluntary registration.
Deduct Home Office Expense
Business owners can deduct the home office expenses, but employees who work from home are not eligible to claim these expenses.
- Council Tax
- Mortgage Interest
- Heat and light
- Landline and phone costs
- General household repairs & maintenance
Meet the deadline
You must pay your tax on time to HM Revenue & Customs and Companies House to avoid the tax penalties. No need to wait for submitting a self-assessment tax return or corporation tax return till the end, you must be organized and prepared beforehand.