Sorting out the tax for your business isn’t always the most interesting and fun of tasks, but it’s still an incredibly important and necessary task. And the thing about tax is that you can make things a little easier for yourself simply by taking the time to plan what you need to do, prepare for the task ahead and have everything that you need ready to go. That’s easy enough to say, but how easy is it to do? When it comes corporate tax planning, we’ve put together our top tips to help make sure that you’re all set when the time comes to complete your tax requirements.
Never Put Off Doing Your Tax Returns
It is all too easy to think that you have plenty of time to sort out your tax returns, only to find that you’re rushing around at the last minute and causing yourself a whole lot of panic and stress. This rushing also means you’re more likely to make mistakes, so you could end up with your return being sent back to you anyway, and having to start all over again. But if you make sure that you keep your records up to date on an ongoing basis, then it will not only be easier and quicker to send through your tax return when the time comes, but you will find that you have the time to think about ways that you can make the most of the benefits and tax breaks available to you.
Ensure That Your Business Classification Is Right
If you’re a partnership or a sole trader, then you may want to take tax planning as the chance to think about your classification, and whether it’s better for you to set up a limited company. When you’re a sole trader, any profit that your business takes in will be subject to income tax, as well as NI deductions. However, as a limited company you will only need to pay out Corporation Tax, which is a much lower amount then Income Tax plus NIC, yielding some significant benefits. But of course there are some downsides as well, so it is worth looking into, and speaking to your accountant to see if you’re business classification is the right one for you.
Know Your Deductions
Many business owners find themselves surprised by just how much money they can take off their tax bill simply by having an understanding of the deductions that relate to your business. Tax deductions fall into two main camps: expenses and capital allowances. Although there are some grey areas of course! Expenses are basically all the things that you might need to do, or buy, in order to run your business, and there is usually a 20p deduction for every £1 that you spend in expenses. There is also a capital allowance, which allows companies to offset their major expenditure against things such as high-value equipment or research and development.
Get Advice If You Need It
There is a good chance that you aren’t going to be an expert in tax unless you’re an accountant or tax planner. So if you want to get it right, then you’re likely to need a bit of support and professional advice. This is one of the most important things you should factor in when planning your corporate tax – time to speak to an expert and get everything checked over. The last thing you want is your return to be rejected because a field was filled in incorrectly, or missed out altogether!
At Cove Accountancy Services, we understand just how difficult it can be to find time in your busy schedule to plan your corporate tax. We usually see clients falling into one of two categories – either they forget to do anything for more of the year and then rush around madly trying to get things done days before the deadline, or they get professional help. Our team can help you plan and forecast your corporate tax for the next year, help you track your spend and update your tax bill estimate and even fill in your return for you, leaving you free to do what you do best without worrying. If you’d like to find out more about our tax planning services, just get in touch with us today.