Five ways to save tax – useful advice for business owners
Here are some useful words of wisdom from the always superb Computer Arts magazine:
- Claim your expenses
The general rule is that any expenditure incurred in the course of your business can be claimed against profits, including capital spending on items like furniture, computers and so on. If the primary purpose for incurring the expense was for business, then the full amount can be claimed.
- Claim tax credits
Tax is what you pay when your income is rising. Tax credits are what you get when your income is falling. If you’re based in the UK, head over to the HM Revenue & Customs’ tax credits webpage to see if you’re entitled to claim.
- Tax planning and records
The best way to avoid getting a nasty tax bill at the end of the financial year is to plan ahead, yet many creatives don’t meet their accountant until after year-end, which is no good at all. You will also need to ensure your financial records are kept up-to-date and that you keep all your receipts for at least four years.
- Pay yourself the right way
As a director and shareholder of your own company, you can save tax if you pay yourself, for example, a minimum salary of £9,000 and then the rest in dividends. So long as you pay up to, say, £25,000 in dividends, you won’t have any personal tax bill to pay.
- Get the right accountant
Always try to avoid doing your accounts on your own, if you can. A good accountant can often save you between 3-5 times what you pay him or her in fees.
Words: Jonathan Amponsah CTA FCCA, Chartered Tax Adviser and Chartered Certified Accountant, The Tax Guys