20 Aug Top 7 Inspiring (and legal) Tax-Saving Ideas for Small Business Owners
All of us try hard to increase income and achieve maximum tax saving. Be it, employees, self-employed professionals or entrepreneurs, saving taxes becomes the #1 priority. We need to know some tax saving ideas.
Taxes are an important aspect of running a business. You, as a business owner, have to be aware of all sorts of taxes and when they are due. It’s exhausting. On the other hand, planning always helps file taxes on time and claim the right deductions.
Achieving colossal capital saving on taxes plays a vital role in the growth of SMEs. After all, you won’t become a wealthy entrepreneur without the knowledge of what you can do and what you can’t, legally!
There are many ways to save income tax.
You may know a couple of them. However, we’re sure you’ll find a unique set of ways in this article to save tax this year.
To educate you with the best ways to pay less tax, we have curated a list of seven unique tax saving ideas for small business owners to win that tax battle.
1. Make use of Personal Savings Allowance:
If you are managing to put away money in a savings account, you can get tax allowance on the interest you receive. For instance,
Most people have a personal savings allowance of up to £1,000 based on the tax band they are in. The following is the tax allowance you get depending on the tax band you are in:
- Basic rate taxpayers get to £1,000
- Additional rate taxpayers get £0
- Higher rate taxpayers get £500
2. Pay yourself efficiently:
While running a business, paying oneself considerably has a greater impact on the business as a whole. How you pay yourself can get the ball rolling. E.g. Salary, dividends and benefits in kind – all have to be considered and reviewed regularly.
A typical benefit in kind is ‘using a company car.’ Generally, entrepreneurs can save tax by having a company car. At your end, make sure you inform HMRC promptly and time to time when employees receive a company vehicle. It helps in avoiding a chunk of tax amount at the end of the year.
3. Claim Marriage Allowance:
Another means of minimizing the tax amount is that a couple can claim Marriage Allowance. This is where you can use a proportion of your partner’s unused Personal Allowance. For the year 2019-20, you can transfer up to 10% of the unused allowance. So if your partner has £1,250 of the unused personal allowance, a claim worth £125 is possible this year.
One thing to keep in mind – rules apply. One of the two must earn less than the current personal allowance of £12,500, and the other partner must earn over this amount but must not be a higher rate taxpayer.
4. Keep it in the family:
More or less, it’s a piece of advice. The standard Personal Allowance is currently £11,850 for tax-free income. You could think of utilizing the personal allowances of your family members who can carry out duties in your business.
If you keep the personal allowances in the family via your business, then it’s a win-win situation for the business and the family.
5. Make sure you’re dealing with VAT correctly:
The ‘simple tax VAT’ impacts many businesses, both big and small across the country, and there are many considerations, which are supposed to be made concerning it. Some of them are:
- When to register?
- Could I benefit from voluntary registration?
- Would the flat rate scheme work for me?
- What VAT I can claim back?
- Would cash accounting be beneficial for my business?
- How VAT impacts on my transactions with overseas customers and suppliers?
Many such considerations need to be worked upon. The list is long. So, having a ‘VAT health check’ could help you immensely.
6. Consider materializing all ‘Tax-Free Benefits In-Kind’ for your staff:
It’s a two-way street. While saving tax for yourself, save tax for your employees too by providing them tax-free benefits. Several of them are:
- Health checks routine.
- Car park facility.
- Covering employees’ relocation expenses.
- Providing mobile phones.
- Facilitating workplace nurseries and crèches.
- Subsidizing certain forms of transport to and from work.
- Enabling company premises with space for carrying out sporting and recreational activities.
- Cash rewards for a staff suggestion scheme.
- Encouraging staff to use carpool facility for business-related work.
- £150/person per year for parties/office events.
7. Discuss with your accountant:
A vital thing, indeed. To save business tax dramatically, you must ensure that you don’t miss out on any qualified tax deductions. You should be efficiently able to track your income, spending and saving in order to file the tax effectively and accurately. Talk with the expert should always be on the cards. The accountant will make sure you have acquired the full field of tax saving, allowing you to grow and protect your wealth for the long term.
Looking for more options? Let’s collaborate –
We are a team of experts who deliver maximum possible saving on taxes. We not only care for your money but substantially save it.
At Easy Tax, we regularly bring our clients’ attention to tax-saving benefits mentioned here and other workable areas where we believe they can save money. We are up to target and resolve that tax pain point in your business and its growth. Just ask these questions to yourself –
- Am I making most out of my business?
- Am I earning sufficient and achieving my financial goal at the end of the year?
Are you looking for professional and expert accounting ideas and tax services?
If yes, then let’s talk it over and achieve your business goals together. Please get in touch or call now to take it further. Our skilled professional tax consultants are trained and would be happy to provide the necessary service. Also let us know what do you think about these tax saving ideas.