Important Tax Tips for Small Businesses in the UK

Important Tax Tips for Small Businesses in the UK

Maintaining a business is an overwhelming task for most business proprietors. This is particularly valid for small business owners. Small businesses need to deal with inventory management, promotions, deals, marketing, bookkeeping and accounting, among numerous different business errands. Presently, with such a significant number of things to deal with, small businesses may tend to forget something as vital as, taxes. Also, a slip-up like this can truly cost enormous! Regardless of whether small business proprietors know about the significance of recording tax returns and tending to different taxes apropos, they still be facing issues in carrying out such exercises.

So if you are a business owner in the UK, and are facing in keeping up with your accounts or taxes, then you should continue reading as we present you some of the most important tax tips, which could best match the requirements for small businesses.

Tax Planning: It is Essential

A productive tax arranging is essential for small businesses who need to guarantee that their tax risk is at a minimum level. By maintaining a low tax bill, businesses can avail smooth cash flow. This further leads to better business expansion and growth.

Making a successful arrangement for tax risk isn’t excessively troublesome. You simply need to discover and comprehend what tax commitments your business has and what alternatives you need to address them. Examine them regularly, and you will do fine in regards to your business tax undertakings.

Stay Organized with Your Financial Records

Up-to-date financial records help demonstrate the genuine picture of taxes and funds. Thus, staying up with the latest is important. You might surmise, that you are running only a small business and don’t need to invest in keeping your financial records organized. In any case, remember that for the most part there are a lot of transactions occurring in an average small business consistently. Not recording one or a couple of transactions will give you an inaccurate summary of your business accounts. This can later affect your business severely and may even welcome HMRC examination. Hence, keeping your business’s financial records organized is vital. Doing appropriate bookkeeping is one approach to guarantee that everything is well organized and up-to-date.

Safeguard the Tax Records

Numerous business proprietors commit this error – dumping the tax records of the earlier years in places where they won’t meddle with their everyday business exercises. This is not at all advisable. As a matter of fact, even the HM Revenue and Customs (HMRC) suggests keeping the records for no less than 22 months. Keeping the old tax records helps in readiness of the most recent tax returns, planning of budgetary articulations, tracking expenses, and checking the progress of your business in addition to other things.

Hire a Small Business Tax Accountant

In spite of being sufficiently cautious, there are situations when tax issues can emerge. Such issues could be exceptionally intricate for common business alone to manage and resolve alone. This is where an expert small business tax accountant can help. A professional tax accountant for small business can enable you to get ready to file tax returns, will give you expert tax advices that reduces your tax risk, and do proper measures so the business avoid raising any tax issues. For a small fee, an expert small business tax accountant can help keep your business accounts up-to-date.

If you are a small business owner based in the UK and are, looking for a skilled and professional small business tax accountancy firm than Affinity Associates is the right place for you to contact. Affinity Associates is one of the leading accountancy firms based in London, UK, and is boasted with a pool of professional and certified accountants and tax experts.

Visit https://www.affinityassociates.com/to know more.

Common Small Business Taxes in the UK

Common Small Business Taxes in the UK

Small businesses in the UK and the proprietors or partners who own them are subject to various taxes – ranging from Corporation Tax to Capital Gains Tax.

Below is an overview of some of the most common business taxes you may encounter as a small business owner in the UK.

Corporation Tax

Corporation Tax is a business tax levied on income or profits made by limited companies in the UK.

For Corporation Tax, companies first need to calculate their operating earnings. This is calculated by deducting expenses related to operating the business, like the cost of goods sold, depreciation, general operating costs, etc. from the actual revenues. Once the operating earnings are derived, the existing Corporation Tax rate is applied to ascertain the amount a company is liable to pay to the HM Revenue & Customs (HMRC).

The payment of Corporation Tax is usually due nine months and one day after the end of a company’s accounting period.

The current Corporation Tax rate is 19%.

PAYE

PAYE (Pay As You Earn) is a scheme regulated by HMRC to collect income tax from your employees as they earn it.

Self-proprietors are not affected by PAYE; they need to self-assess their income and file a tax return.

Limited companies, however, that have their own staff and draw salaries, are considered as employers, and they have to understand and operate PAYE as a part of their payroll system.

PAYE is a complicated subject with many rules. For that reason, it will be in the best interest to get professional advice. In fact, for a small business, considering outsourced payroll services, which also include PAYE tax advice, can prove very beneficial.

If operating PAYE, employers must pay to HMRC every month!

Value Added Tax (VAT)

Value Added Tax (VAT) is a consumption tax levied on most goods and services provided by businesses registered in the UK.

UK VAT rates differ based on different goods and services, yet, the current standard VAT rate is 20%, the reduced rate is 5%, and the zero rate is, as you have guessed, 0%.

Companies need to register for VAT if their turnover is more than the current VAT threshold specified by the HMRC. Currently, the VAT threshold is £85,000.

Every VAT-registered business in the UK needs to submit its VAT returns online, usually every three months. And, in order to pay the VAT bill, businesses need to rely on electronic mediums, such as internet banking or direct debit.

Capital Gains Tax

Capital Gains Tax (CGT) is a tax levied on the profit that a company makes by selling its own assets. These assets include plant and machinery, fixtures and fittings, land and building, shares, trademarks, etc.

The current CGT is 20% on profits made from selling assets.

There are ways to reduce the Capital Gains Tax liability, but for that, you need to start early tax planning and get the right tax advice from a professional.

Tax business can be very confusing for a business owner. Therefore, just get in touch with us and engage our experienced tax accountants for small business in the UK.

We are the leading small business accountancy firm with some of the best small business tax accountants in the UK. We will help you deal with all your personal and corporate taxes in the most professional manner. Ranging from Corporation Tax and VAT to PAYE and Capital Gains Tax, our tax accountants for small business in the UK will take care of everything on your behalf.

Contact us today to discover what our small business tax accountants in the UK can do for you: http://www.affinityassociates.com/contact-us/.