Taxes for small businesses might be a huge minefield especially because it’s not a straightforward topic. However, with a little research and time as well as working hand in hand with your accountant, you can always find ways to save money on tax. Here are some of the ways your business can pay less tax.

1.            Know And Understand Your Industry 

You need to remain engaged with your trade association or body. You should read the newsletters, attend events and much more. There are many industries with special allowances and dispensations from HMRC including uniform allowances. Experts at VATGlobal say you need to consult with your trade union because they are on your side for the best results.

2.            Spend More Time On Your Business 

Are you the best person suited to do your VAT returns and bookkeeping? You need to spend more time working on your business and allow the accountants and bookkeepers to do their job. You might think you are saving on fees by doing your books but you might be making things worse, especially if you are not well-versed in tax and bookkeeping.

3.            Know And Understand VAT

A lot of business owners are losing out on VAT. Have you checked everything you know about VAT? Could you be paying more than you are supposed to? Have you checked out the Flat Rate Scheme? If you don’t know the Flat Rate Scheme, you need to learn more about it because it can be a great source of profit.

As the name suggests, you will be paying a single flat rate for your VAT turnover. There are different flat rates for various industries. For instance, it’s 12% for property managers and estate agents while for IT and computer consultants it comes to 14.5%. Here, you should choose the VAT rate applicable to your industry. Next, you can calculate the percentage from you gross turnover every quarter and make the payments to HMRC.

Note that, you will not be able to reclaim the VAT on any purchases. However, you can keep the difference between the percentage amount and the VAT you charge your customers (20%). HMRC might even give you a 1% discount on your first year of registration. If you want to pay as little VAT as possible, you need to trust your accountant as the trusted advisor when it comes to tax matters.

4.            Work From Home

There are generous savings on your taxes, if you are running a self-employed business but working from home. You need to do your research and learn about them. For instance, you can claim about £2 per week for modest use of home. However, you can actually claim more.

There is a scientific method used to calculate the expenses you can deduct from using your home, especially for sole traders. Here is a breakdown of those costs.

a)             Council Tax

b)            Heat and light

c)             Insurance

d)            Water

e)            Mortgage Interest

f)             General household maintenance and repairs.

Any business that uses a dedicated room in the house for work, it’s easy to claim a generous amount from ‘use of home’. Visit the official HMRC website to learn what can be claimed and how you can take advantage of it to save more money on your taxes.

5.            Keep It In The Family 

Currently, the standard Personal Allowance stands at about £11,850, completely tax free income. If possible, you can take advantage of the personal allowances of any family members who can carry out duties within your business.


6.            Be Organized 

Bookkeeping can be quite hectic. If you are not doing it yourself and choose to hire an expert for the job, there are a few things you can do to make sure things go smoothly. You should keep copies of all the records. That way, you can ensure that you are claiming for everything you are entitled to without any hassles. Don’t fall victim of disallowed expenses from the HMRC if you haven’t been keeping proper records.

10. Choose A Good Team 

Even though your business is being run as a sole proprietorship, you can always rely on a good team to help you push your business to higher limits. For instance, make sure your financial advisor or accountant is trustworthy and approachable. That way, you can understand the financial position of your business, especially when you need to make hefty decisions.

Don’t expect that your accountant should be solely responsible for giving financial advice. If you have the best advice, especially from a financial advisor, regarding any future investments and how to save money, it’s possible to save money from your tax liability.

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