As you may already know, running your own business can be extremely hard work.
In addition to the day-to-day activities which define and make your business what it is, running a business requires you to complete administrative tasks to ensure your business keeps up with necessary legal and financial duties; for example, your tax obligations.
In this article, we select some of our top tax tips to help make running your business just that little bit easier.
1. Precise time keeping
Time keeping is an absolute must for making things easier for your business. Whether you run a limited company or are a sole trader, the tax duties you are required to fulfil have deadlines associated with them and where you do not meet these, penalties can be applied.
For example, if your business is a limited company, you are required to submit annual accounts and paper work to Companies House by a specific date, both of which tasks have tax elements associated with them. In addition, you will have to submit a tax return.
For those of you who trade as sole traders or partnerships, tax liabilities and self-assessments are due each year by the 31st January, meaning that precise time keeping is crucial for you too.
2. Pristine financial record keeping
Yes, it may sound painfully obvious but sometimes the obvious can be so obvious it is often overlooked.
Accurate and clear financial record keeping is essential for your business as it means that when it comes to you having to collect the information required for the purposes of carrying out your tax obligations, your time is saved for the tax task, rather than spent on finding the tools to get you started.
Record everything that requires recording because when a few basic records are missing, the financial impression of your business can seem different to what it actually is.
In tandem with keeping clear and accurate financial records is keeping them in a safe place – HMRC state that business records must be maintained for six years so if you are required to dig out a record from previous years it is much easier if it has been kept safe and well filed.
This is also where the use of an online accounting package can come in handy as it allows you access to your records remotely at any time, and it can assist if you use an accountant to sort out your tax as it grants them easy access too.
3. Mixing business with pleasure?…
Whilst limited companies are required to have a bank account solely for the business, if your business is run as a sole trader there is no requirement to have one. However, regardless of this it is helpful for tax and other purposes to keep personal finance and business finances separate.
This makes things easier for your business, for example, in terms of knowing what the current budget stands at and in terms of easy clarification on which spends are business ones rather than individually trying to depict these from personal ones.
If your spouse works with you, wise tax thinking when negotiating a salary for them can make things easier for you (and of course your spouse). A salary for your spouse must naturally be relevant and realistic in terms of what work they actually do, but there are other tax elements to think about such as if their wage is below £153 per week they will not be required to pay National Insurance (NI) contributions and if their weekly salary is above £111 per week they will be entitled to both the basic state pension and the additional state pension.
4. Working from home?
You do not need us to tell you that many business owners work from home, or at least start off by doing so. However, with the recent impact of the pandemic where more and more people are working from home, this has likely contributed to greater numbers of business owners now doing so.
There are tax tips to be aware of when working from home which can make things easier for your business.
For example, using your home as your office is something which can be included as a claim against profits.
Also, whilst you may be working from home, this does not rule out the need to make business trips such as essential business meetings or (when the pandemic eases) trips over night for conferences, for example.
Where you are taking business trips you can claim mileage for them at 45p per mile for the initial 10,000 miles and 25p per mile for anything over this.
5. Forget DIY and use an accountant
There are many aspects of running a business and many of them we often end up doing ourselves to save money until the business is in a position to outsource or employ further staff.
However, one area not to skimp on is the accounting side of things. Using an accountant will ensure that all tax issues are carried out correctly and that you are saved money where you are due it, as well as ensuring that tax tasks are done on time.
Where a tax problem occurs, it can be difficult for a business owner to understand what the issue is, so having a specialist to hand to deal with it can make things much easier for your business.
Additionally, the fees your business incurs on the use of an accountant are in fact tax deductible – making things easier for your business in terms of saving money and helping to raise business profits.
At Cue Talent Advisory, we handle all affairs business, management & lifestyle for individuals, businesses, and overseas clients which includes their tax affairs. To find out more and set up a chat, get in touch via our contact form, email us directly or call us on 0203 815 8005.
