All businesses should seek to be as tax efficient as possible. Discovering ways to decrease business taxes can increase your margins, improve cash flow and enhance your overall business strategy.
Here are some ways to make your business as tax efficient as possible.
1. Know what taxes your business pays
Your taxes depend on the nature of your company. You must pay income tax, whether you’ve ever been working as a single trader or in a company. Income tax is nationwide, and everyone who is in any type of employment must pay it.
Additional taxes your business might have to pay for are VAT, and contributions from employer’s National Insurance.
2. Claim legitimate deductible business expenses
Legal deductible business expenses are one of the ways to decrease tax liability. They can be subtracted from the company’s income before being subjected to taxation. A sample list is provided below:
- Workplace costs – from simple papers to phone charges
- Travel – fuel, rail, bus, and parking facilities
- Clothing – uniforms or something that you use for work.
- Personnel expenses – subcontractors’ costs count, as well.
- Financial Costs – bank charges and insurance rates are involved. Running the property-ventilation, electricity, and business rates are legal expenses.
- Promotion– Your advertising and sales expenses, for example, your website maintenance capital.
You will be able to claim tax relief on the above costs through limited business expenses, which helps keep your business more tax-efficient by decreasing your profit.
You can have allowable expenses for your company if your business is insured. Business insurance will not only protect your business, but it will also help you pay for what you need for the growth of your business and effectively manage your business needs, thus reducing taxes.
3. Cover the losses
When your business experiences loss during a given year, in areas like trading, selling goods, or land gained profits, you will typically assert a corporation tax relief that will decrease a company tax.
You can do that through your tax return (whether you are a single trader or partner). If you wish, you can incur taxes to cover potential income years, thereby reducing the tax you would have to pay the next year.
4. Improve cash flow through VAT
While you would assume VAT accounting is an easy job, it will potentially boost your cash flow. For example, you can take in VAT revenue and keep for a brief time before paying back. This helps you to reach cash when you need them the most.
No one likes to spend extra money when they don’t have to, and when it comes to your business, we know that every penny is important to keep your company running smoothly and efficiently.
By keeping on top of your money and being smart with your taxes, you will be able to make back some of that money in small and simple ways. Start with those outlined in this article, and you will be on your way to savings in no time.