Saving money on taxes is something we all wish to do in business – ethically of course. Here are some ways to do so.
In this post, I will show how to save money on taxes tips and tricks.
Be Aware Of Your Trade
Make sure you know what is going on. Read magazines. Subscribe to newsletters. Go to conferences and other special events. Your trade body is there to help you, and you need to take advantage of all they have to offer. The best thing that you can do for yourself is to stay informed on everything that is happening.
Is bookkeeping something that you feel comfortable with? Do you believe you can handle the VAT returns?
Your business will thrive if you devote your attention to it. There are other people that are probably better suited to handle the financial aspects of what you are doing. Of course, you will save money upfront if you try and handle these tasks on your own because you won’t have to pay someone to do it for you. However, when you hire someone that is trained in this area, they may be able to save you money in other ways.
Understand Your VAT
Many business owners are not taking advantage of VAT. How much are you currently paying? Are you aware of the flat rate scheme? That is one area that most business owners are not familiar with. It is definitely something to look into, though, because it can earn you a pretty penny if you know what you are doing.
So, what is the flat rate scheme? Basically, you just pay a one time, flat rate for your turnover. You can look at HMRC to see what the rate is for your business. It varies depending on the industry; for example, some industries may pay twelve percent while others may pay a little more than fourteen percent.
Select the rate that applies to your industry, take that percentage and make it applicable to your gross turnover and then give that amount to the HMRC. A lot of VAT is now digital, which can make things easier to sort – see this post from VATGlobal for details.
Reclaiming the VAT on purchases generally isn’t allowed, but you do get to benefit from the difference on the VAT charged to your customers. Often, this is around twenty percent. You may qualify for other discounts through HMRC as well.
We are well versed in the flat rate scheme, and we have been successful in helping our clients save thousands of pounds each year. This is definitely an option that you want to look into. If you are interested in finding out more, there are several guides to investigate. These include 21 Costly VAT Mistakes Businesses Make On Their VAT Returns and An Overview of the Flat Rate VAT Scheme For Small Businesses by ByteStart.
Enlist The Services Of Your Accountant
Many business owners are less than thrilled with their accountant. They feel they still have to pay too much in taxes, and they aren’t sure how their accountant is really helping them. That is not the right attitude to have. Instead, look at your accountant as a resource. Those professionals that feel positively toward their accountant are often the ones that save money. If you aren’t happy with the person you are working with, think about finding someone new.
Set Up A Home Office
If you own your own business, and you work from home, you can save on taxes through the HMRC. Look into your options.
Many businesses don’t take full advantage of all they can claim working from home. For example, you can claim part of your insurance, water, heating, electricity, mortgage, home maintenance, and even your phone. Also, if you have a room solely dedicated to your home office, you can save quite a bit there as well.
Hire Your Family
Do you need to take on an employee or two? If you hire your family members, you could take advantage of the standard Personal Allowance.
Give Benefits To Your Staff
In this case, by helping your staff members, you can help yourself as well. There are a number of tax-free benefits that your staff can enjoy, and when you extend those benefits to them, you get a tax break as well. Many businesses either don’t know about this or choose not to use the benefits. For example, investigate the cycle to work benefit. A lot of large companies with large and prominent profiles are benefiting from these tax savings, but smaller businesses just aren’t doing as well. It may simply be a matter of getting the word out so that everyone knows what is available.
There are childcare vouchers that are tax-free as well. This enables everyone to save money going forward. HMRC has made changes that cut back on how much tax you can save through this method. You should still look into it, though, as the savings are still beneficial all around.