As we progress through the first quarter of the new tax year, we consider the various tax savings options available to you as an individual and for your small business to keep your profitable and enjoy good cash flow management.
Read on for our Tax Planning Guide for Small Businesses.
As a company director of a profitable limited company, you will want to strike a balance in investing profit back into your business and taking funds out for personal use, all the while ensuring you do so in a tax efficient manner that works for you. It is possible to take a salary and/or dividends from your company in a tax efficient manner for personal use.
You have two options to extract profit from your business for personal use – either through a salary and/or dividends. The dividend option is the most tax efficient option of the two and in this article we share an overview of how dividends work and how you can use them to your advantage without disruption to your profitable business.
Did you know that the limited company business structure is the most popular setup for businesses in the UK?
If you’re thinking about taking the next step for your business and becoming a limited company, then read further to check you’re making the right decision. In this article we look at the advantages and disadvantages of a limited company structure.
A limited company is a type of company which allows the business owner to keep their own assets and finances separate from the business itself. This means that the business is an entity in its own right.
Compared to other types of business structures, the main difference is that the company’s shareholders are personally protected, so there’s no risk to personal wealth.
This is a question we get asked by our clients frequently and although the law states clearly that only cars used solely for business purposes by firms such as driving schools, car hire businesses or tax firms can reclaim VAT on cars, there are grey areas to consider.
Having a great business idea is just the first step to setting up a viable business and one of the biggest barriers is how to get business finance for your great business idea.
In this article, we provide the main revenue streams to consider to help finance new businesses in the UK as, let’s face it, it won’t be cheap and you may well have to incur a large upfront cost before you even start trading. Costs could include anything from renting premises to run your business from, buying equipment, marketing and advertising and the unavoidable costs of registering your business with Companies House and HMRC and accounting costs to ensure you work within the law and in the most ta efficient way possible.
How to finance business therefore is one of the main hurdles to overcome to becoming self-employed.
If you are self-employed and earning more than £1,000, a partner in a partnership business, a company director or if you have other income from savings, investments or property, you will need to file a Self Assessment Tax Return (SA). The following article will show you how to reduce corporate taxes.
The SA is not a tax itself, it is a way of calculating and paying tax. If you fit into one of the categories above you are wholly responsible for completing a SA each year and for paying any tax due. To be clear, HMRC will not prompt you to complete a tax return. If HMRC do however send you a SA to complete, this must be completed and returned by the due date and not be ignored unless you have agreed with HMRC directly to cancel it.
As a business owner of a limited company, you will be working hard to grow and be profitable whilst being aware of tax reliefs available and tax charges liable by you personally and your business.
All profits you make in your limited company are subject to a corporation tax rate of 19% in the current 2019/20 tax year. If you want to pay your corporation tax bill early with HMRC so as to plan ahead and not get caught out by a hefty tax bill later in the year, you have the option to pay your corporation tax bill early, with the added incentive of being rewarded with interest on early repayments.
There are many advantages of having a sole trader structure for your business with the main one being the simplicity of business administration versus a limited company set-up. However, as your business thrives and grows the potential next step to limited company status can provide credibility and attractiveness as an established business to your customers, whilst also very importantly providing an opportunity to review your tax position.
There is a balance to be struck when considering the change from sole trader to limited company. At a certain point you will need to consider if you are overpaying tax as a sole trader and it may be more tax efficient to move to a limited company structure. The rule of thumb is when your turnover reaches around £30,000 per year, you should start to consider limited company status. At this relatively low threshold of turnover you may still wait before making the transition, as there are various other deciding factors to consider as well as your business’ turnover.
Running your own business is no easy task even for an experienced business owner. At the very least, you will want to manage your business within the legal parameters set out by HMRC but also ideally, you will want to work as tax efficiently as possible whilst meet your tax obligations and keeping a good record with the taxman.
In this blog we review the typical issues that arise with HMRC that cause business owners to be unnecessarily penalised.
What is my optimum salary level?
As a director and owner of a limited company, you are entitled to pay yourself a salary at whatever salary level you like. However, you do need to be aware of the tax implications when making a decision on the amount you wish to pay yourself, and in this blog we review the options available to you to ensure you are working as tax efficiently as possible.
You will be aware of the tax benefits of a limited company structure, including the opportunity to reduce your corporation tax bill by paying yourself a salary and/or dividends. Another significant advantage of paying yourself a salary is that if you do so at the Lower Earnings Limit currently set at £6,136 for the 2019/20 tax year, you will be entitled towards a state pension at retirement. This low level of salary therefore is a good starting point when deciding the level of salary that works best for you.
