Top ways small business owners can pay less tax
For small businesses, taxes can be such a burden that business suffers. But, in 2019, there are ways you can make sure you stay in control of your taxes and even find ways to pay less tax. Here’s how…
Register as a Limited Liability Company
Just because you’re a small business doesn’t mean you can’t take advantage of the benefits that a limited liability company (LLC) offers. As an LLC, you’ll likely pay less personal tax than you would as a sole trader. Keep in mind though, LLCs are liable to pay corporation tax; thankfully, the government is set to cut this from 19% to 17% by 2020.
If you’re the director and shareholder of an LLC, you can opt to take a small salary to minimise the amount of National Insurance you must pay, and draw the rest of your income from dividends. Dividends are not subject to National Insurance contributions and are taxed separately. Running your business as an LLC could help you take home more of your business profits.
Be VAT knowledgeable
The amount of VAT you have to pay, if any at all, can vary. You could pay more than you need to if you aren’t taking advantage of the government’s Flat Rate VAT scheme. This allows you to choose a VAT rate according to your industry which you pay to HMRC as a percentage of your gross turnover each quarter.
It can be an unexpected source of profit for some businesses as you can usually keep the difference between the VAT you charge your customers (usually 20%) and the flat rate (varies depending on industry).
Hire an accountant
There isn’t a more efficient way to save on your small business tax than to hire an experienced, reputable accountant. Hiring an accountant will allow you to save money on your taxes because nobody knows the ins and outs of the system like they do.
They know the best ways to save your money, and they keep up-to-date with the latest changes in tax regulation, so you don’t have to. They also free up your time so you can put it towards running the most crucial aspects of your business, and time is money.
These are just a few ways you can save you and your business money. As a small business, you need all you can to grow, so consider these methods to save yourself the hassle in the long run.
If you’re looking for a better way to do your taxes this year, get in touch with the accounting experts at Big Hand today on 0161 327 2911. We will ensure you never pay more than your fair share.