30 Apr 6 tax saving tips for SMEs
Small business owners need to make the most of all available tax breaks, and taking utmost advantage of professional advice can help identify some of these. It’s often the case that SMEs manage their own finances and don’t spend enough time researching some of the ways they could save money and enhance profits. Some top tips for tax savings for small businesses include:
1. Sole trader tax claims
Recent sole trader startups can claim against profits for equipment and items used in the business, even if they were purchased prior to the date of starting to trade.
2. Capital allowance scheme
The tax deductions that you could claim on equipment purchased for your business (capital allowance scheme) means you get 100% of the initial £200,000 spent on qualifying capital items. If you plan to buy items of plant and larger machinery items then making the commitment to purchase prior to your year end means you can offset the costs up to £200,000 against profits for the following year.
3. Benefits of becoming a private limited company
As corporation tax is lower than income tax it could be worthwhile incorporating your business.
4. Taking profits out of your business
If you run a limited company, paying yourself a small salary that’s geared to personal tax allowances and then giving yourself an additional payment via dividend income could save you quite a bit in tax and national insurance. If you have a spouse working in the business part time it could also be beneficial to pay them a salary, depending on levels of any other income they receive.
5. Mobile phone
If you need a mobile phone for business purposes, putting it in the name of your business means you can submit all charges as a tax deductible expense.
6. Cars for business use
You pay higher tax on company cars, so opting to run your own car for business use saves money and you can claim authorised mileage rates as expenses.
SQK Accountancy offer professional cloud accountancy, VAT advice and payroll services to businesses based anywhere in the UK. Contact us to learn about the affordable ways our accountancy practice can help your business increase profits.