Every penny counts as a business owner trying to reach that elusive profit margin so the last thing you want is to find out that you have been paying too much in taxes for any length of time. Having an accountant to advise you will help.
There are many options for expenses and tax deductions which can be incredibly confusing for the small business owner but understanding your options and obligations properly could end up saving you a fortune in tax payments.
Here are a few key things to think about when it comes to sorting out your taxes:
Use Online Accounting Software
If you don’t have an accountant then use an accounting software package or app instead of just a spreadsheet. Many apps have been designed specifically for small businesses and only cost a small monthly fee.
These software programs will often give you a running total of tax owed as you record income and expenditure within it. As long as the data you are inputting is correct, you will be able to see how much you are likely to owe in tax at the end of the year, and put money aside accordingly.
Record All Of Your Receipts Accurately
Make sure you keep copies of all of your receipts – there are many apps now which allow you to scan and keep digital copies of receipts rather than having to worry about keeping lots of pieces of paper.
As long as you have a record of an expense you can track it when it comes to claiming tax deductions. If you don’t have accurate records you could end up missing out on key expense allowances.
Don’t Forget About Your Home Office
Even if you work from home you can still deduct expenses related to your home office including things like your internet and phone service, stationary items and potentially some of your insurance costs – you can check with HMRC as to exactly what you claim for.
Car And Travel Costs
Again you can apply for deductions against your car use for your business including mileage and other related costs. You need to make sure you are only claiming against legitimate business use but check with HMRC as to what costs are allowable.
Don’t Forget About Your Business Equipment
If you have had to buy equipment for your business then you might also be able to get tax deductions for it so do your homework – if you have had to buy computers or printers or any other equipment it might well be a legitimate business expense.
Decide How To Set Up Your Company
There are different tax requirements for if you run your company as a sole trader or if you set it up as a limited company so make sure you do your homework and understand the differences in tax obligations before you make a decision. We found this guide online by Crunch for business owners wanting to set up a limited company which is very useful:
Apart from the many resources online you should still seek advice from a professional accountant who can take you through all the different tax requirements for different business set ups.
Check What Tax You Are Eligible To Pay
Sometimes mistakes do happen so make sure you understand fully what types of taxes you are liable for and then they have to be paid. Make sure your tax records have the right details on them when it comes to your tax code.
When filing tax returns always make sure the numbers add up and match to the figures you have within your accounting software. If you keep track all year you shouldn’t end up with any nasty surprises at the end.
Make Sure You Understand The Deadlines
Have a look carefully at the tax filing and payment deadlines for HMRC as they vary according to when you started your business and whether you complete your tax return online or on paper so make sure you are fully aware.
Don’t leave it to the very last minute to complete you tax return. In theory, you have from the beginning of April until at least the end of October, so allow yourself plenty of time to sit down and focus on the form.
Check that you understand exactly what you need to pay and when as there are often more than one payment date in a year and it might be that you have money in your tax account already so keep a clear track of what you owe and when it is due by.
As a business owner, having to sort out and pay your own taxes is perhaps one of the biggest challenges compared with working as an employee, so make sure you keep on top of everything, keep accurate records of all receipts and stay on top of all required deadlines for payment and you should be fine.