If there is one thing that all business owners hate, it has to be taxes. Once you set up a company, you will have both business and personal taxes to pay for in order to keep the tax man happy. Unfortunately, it all ends up and, if you aren’t careful, you could have some very large bills on your hands.
It can be easy to be careful with your business taxes, though. And by being very wary of your company’s finances, you could even save quite a bit on your annual tax bill. Here are a few ways it is possible to save on your business tax.
Record All Business Expenses
You need to keep a track of all your business expenses throughout the financial year. That’s because you will be able to deduct them from your yearly profits. You will then only be taxed on the net profit, which is the amount that is left over once you have deducted all of your expenses. So, make sure you collect all the receipts and invoices associated with any expenses so that you can prove them when you come to filing your tax return.Why not learn more about operating lease journal entries to save time and cost!
Set Up A Retirement Fund
If you don’t already have a retirement fund set up for yourself, it’s a good idea to create one now. The money that you pay into this will be deducted from your taxes and can help you save quite a large sum. If you have any employees, you might want to set up a company retirement fund for them too as this can also be deducted from your annual business taxes.
Find A Reliable Accountant
There are quite a few business owners who try to take care of their own taxes and bookkeeping because they believe that hiring an accountant would be very expensive. However, that isn’t the case. In fact, any good tax accountant worth their salt will actually save you a lot more money on your taxes than what they cost. Getting an accountant will certainly reduce your tax bill by a lot more than if you had tried to do it yourself. Not only that, though, but your accounting expenses are also tax deductible!
Write Off Bad Debts
Do you have some unpaid invoices that have been outstanding for quite some time? If so, you might need to take the late payer to a small claims court to get your money back. Unfortunately, this isn’t always possible if the client has gone bust in the meantime. In these cases in which it is unlikely your invoices will be paid, you can always write these off as bad debts. That means that the tax man won’t expect you to pay any tax on them.
Deduct Gifts And Rewards
If you buy employees rewards for good work and try to woo new clients with business gifts, keep in mind that these can also be deducted from your taxes!
(Extra) More ways to save on Taxes!
Let’s be honest for a moment, being self-employed comes with many advantages, doesn’t it? However, just because this career choice is high in benefits, that doesn’t mean that there aren’t any downsides, does it? One of the worse downsides for anyone who is self-employed or runs a small business is tax. It’s not just a case of having to pay tax, it’s also the complexities around it that can make it such a nightmare.
The good news is that there is plenty of help out there, it’s just a case of taking the initiative to actually use the help that is available to you. Below are some useful tips and pieces of advice that should help to make the process of managing your taxes simpler and more straightforward, not to mention, far less stressful.
You and your business are separate
One of the most important things to remember is that your business is wholly separate to you. It’s crucial to understand that your business is a separate thing to you, and as part of this separation it needs to have its own bank account and identity. Otherwise, things could become even more complex than they need to be.
By keeping yourself and your business separate, you will make managing your taxes far simpler and easier. What it’s also important to remember is that there is plenty of tax planning advice online, should you need it.
Whatever you have spent money on, ensure that you have a record of it available to you. Whether it’s a new book you’ve purchased or a pack of pens, keep records of every purchase. So that when it comes to filling in your tax return, you have accurate details of both your turnover, profits and loss figures too.
If accounting isn’t your strong point, it’s best that you pay someone else to deal with it for you. Honestly, this is a more than a worthwhile business expense.
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Hopefully, all of these tips help you substantially reduce your business tax this year!
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