Survival stats don´t look good for small business so if you can save money on tax liabilities you stand a better chance. For the record, an estimated 50% of small businesses fail in their first year, and another 92% collapse after five years. The last economic crisis claimed over 400,000 small businesses and one in three sole traders in the UK say they are on the brink of collapse in 2013.
Believe it or not, but saving money on tax liabilities could save you thousands of pounds which ultimately keeps you in business. As a quick guideline we have assembled a list for you to ease yourself into, but we strongly recommend you follow these suggestions up with our experts at Taxaccolega, a low fixed fee accountant. We really can save you money – and your business!.
- If you are starting out as a sole trader you can claim for tax breaks on tools you need to ply your trade – even if you purchased them before you started trading.
- Still on the subject of start-ups, you must inform HMRC of your business name and address within the first three months of opening your business otherwise you will incur a £100 fine.
- Keeping your tax liabilities below the personal allowances threshold of £9,440 and you will be only paying small amount of Class 4 NIC at 9%.
- You can claim 45p tax free mileage on vehicles used for business purposes.
- Register for a mobile phone account under your business name and offset liabilities against revenue.
- If you are a limited company you can draw a small salary of up to £645.00 per month which will not result you paying Income Tax, Employee NIC and Employer NIC.
- Freelancers working from home can deduct costs of utility bills for the running of their business.
- Make contributions into a personal pension plan and you could save yourself over £3000´s worth of tax relief.
- If you have unused or unsold stock, lend it to contractors rather than leasing it or storing it. You can claim tax back on this.
- Keep business and personal expenses separate.
- Take out a Company Voluntary Arrangement (CVA). Debts owed to creditors under the schemes are non-taxable so you can carry your unsettled invoices into a new tax year.
- If you are paying 40% tax liabilities you can reduce this figure by bringing in your spouse as a business partner, providing you can show there is commercial justification.
The final, and perhaps most important tip is to seek professional help from qualified accountants so that you can benefit from a wide range of tax benefits and avoid paying HMRC penalties on your Self Assessment Tax Returns. For more information contact Taxaccolega, a low fixed fee accountant in London, by emailing firstname.lastname@example.org or calling our free phone number on 08000 235 234.