Running a business is no mean feat and there are many different things that owners need to attend to on a daily basis. One of these responsibilities is unavoidable: tax. And, although dealing with tax isn't the most enjoyable part of running a business, it's extremely important to keep on top of it.
To help you out, here are our top 10 tips for tax and beyond:
1. HMRC states that businesses should hold on to all business records for six years. Ensure that all receipts and invoices are stored in a safe place, and that all records are accurate.
2. Submitting tax returns, accounts and Companies House paperwork (if applicable) accurately and on time is essential. Any errors, or late submissions, could result in penalties or an HMRC investigation.
3. You may benefit greatly from hiring an accountant. They will become your personal advisor, saving you a significant amount of time and money by taking control of your accounts. Though having an accountant costs, they will alleviate some of the stress associated with running your own business.
4. As a small business, you're entitled to claim for a range of allowances, from capital expenditure to assistance with business rates. Make sure you claim for all allowances you're eligible for, as this can really help you as a small business owner.
5. Accounting software can help you and your accountant out. You'll be able to able to access accounts on-the-go, which will make your business more efficient.
6. If you run your business from your home, you are entitled to claim back a fixed nominal sum every year. Or, you can claim expenses for part of your home-related costs, so long as those costs are incurred as a direct result of your business. Calculating these costs can be tricky, so seeking the help of an accountant is advised.
7. If you are registered as a limited company, you must only declare dividends from retained profits. Declaring dividends illegally could land you in serious trouble.
8. VAT-registered businesses may benefit from the Flat Rate Scheme. Using this method, you will pay a fixed VAT rate to HMRC, but you won't be able to reclaim VAT on your own purchases. Your accountant will be able to advise you on whether this scheme is suitable for you.
9. Make sure you claim for any set-up costs for your business, including equipment, plus any formation expenses.
10. Set aside some extra money to ensure you're never caught out when tax deadlines approach or consider taking out a short-term tax loan to cover the shortfall and ensure that you can better manage your cash flow through the stickier times without having to delve into overdrafts or cash reserves.
Click here for more information about our tax funding.