6 Taxes Strategies
A small business needs to develop a tax strategy that it will use to make the most out of the complicated tax code. This strategy isn’t only about paying as little taxes as you can (although that is important), but also about using all the refund and tax breaks you get the right to.
The strategy needs to be made by the business as a whole, and it should include the input from not just the tax experts, but also from the management, the owners, and the HR experts.
The most common tax the UK business will pay is VAT. That stands for Value Added Tax, and it’s paid on the value your products have that is larger than what it takes to make them. This tax starts to be paid when your business has a turn over higher than £85.000.
What you need to strategize about is do you want to start paying it at a lower threshold of turn over. You have the right to do so, and that means you get the right to use all the refunds that those who pay VAT have the right to. This means you’ll need to raise prices, and the strategy is to choose between the two.
There’s a growing interest for the government to make the paying and recording of taxes digital from day one. That’s something that will be useful to all parties, but it is difficult to adapt to once it’s still a novelty. Choosing the software is, therefore, a big part of your overall planning.
It’s important to choose the software for the business you want to have and not just the one you have at the moment. That way, you’ll be able to keep the software as your company grows.
Inside team or hiring
It’s important to have a plan: who will do the accounting work. There are two main ways to go. You could keep this part of the job in house and have your own accounting team that handles your business alone, or you could hire outside accountants.
Both options have their upsides and downsides. It’s sometimes less expensive to hire an outside team to do a particular task, while that means that you won’t get the attention you wanted to and you might need so that your accounting work is done right. For the most part, this depends on the size of your business.
General or specific allowance
There are usually business allowances available that a company can use to lower their taxes. These allowances could always be used in two ways – there’s a bulk amount you can take, or you can keep track of each allowable expense, prove it and get the precise amount.
The second option is obviously better because you get more money back, but it has a downside that comes from the fact that you need to invest time, money, and resources into keeping track of all the expenses to the last detail.
Having a schedule
There’s a timetable in which you need to pay taxes when you’re late with your payments; there are fees and penalties you’ll need to pay as well. That’s why it’s important to have a schedule on which you’ll make the payments.
This needs to start with an equally strict schedule that sets when and how you plan to collect the proper data and the proper documentation you need to send to HMRC in order to pay taxes. These schedules need to take into account possible delays you couldn’t predict.
In the end, your tax strategy needs to account for a possible audit. The audit is the process in which the government checks your records to make sure you’re reporting and paying the right amount of taxes each year. It can happen when something is wrong with your records or without any particular reasons what so ever.
The audit doesn’t have to be a difficult and complicated procedure, and it doesn’t have to something be afraid of, especially if you don’t have anything to hide. It will disrupt your day to day work, not only on taxes, but overall, and that’s something to prepare for.
There are a few long term tax strategies you need to prepare for the complicated business of paying your dues to the government. These preparations will help you not only pay as little as you can in taxes, but also help you organize your time and your resources as best as you can.
The strategy should be about the process of recording your taxes, and about who will do it. There’s also an issue of what kind of tax refunds will use and why. This needs to be arranged at the level of the business manager and ownership.