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Ten ways to stay on top of your taxes

There is no doubt that staying on top of your tax obligations can be challenging, especially for small business owners who are already focusing all their time and efforts on running and growing their business.

To help ease your tax liabilities, here are ten useful tips for small businesses:

    1. Make a list of your key accounting dates. Submitting the correct documents on time is key to stopping you from incurring any fines. You may wish to appoint an accountant to handle this, as they will be able to advise you of all relevant deadlines and will help complete any submissions required by HM Revenue and Customs (HMRC).

    2. Be organised. HMRC states that you must keep all your documents, such as invoices and expense receipts, for at least six years - just in case your company is ever investigated (even though this is highly unlikely). As well as retaining the original hard copies, it is advisable to scan them and back them up on a cloud-based application such as Dropbox or Google Drive.

    3. Keep your receipts safe. If your company is VAT-registered, you will need to keep all receipts for any business costs that have been incurred for the company. For example, if you buy some materials for a project, you will be entitled to claim back the VAT. You must have a record of the transaction in order to claim the VAT back.

    4. Cloud accounting. Using an online accountancy platform such as Nixon Williams Vantage, can enable you to have 24-hour access to your business finances, so you can see a snapshot of your financial accounts wherever you are. This is beneficial as you will always know how much money you can withdraw, and how much should kept aside for your annual tax bill.

    5. Salaries and dividends. This can get quite complex depending on your situation. If, for example, you operate through a limited company, you can take out a set salary and then collect dividends from your company’s profit. Once you’ve appointed your accountant, they will give you the best advice on how to pay yourself.

    6. Register for the Flat Rate VAT Scheme. If your VAT turnover is less than £150,000 (this is your turnover excluding VAT) and you don’t have many expenses, it could be beneficial for you to register for the VAT Flat Rate Scheme. This scheme allows registered businesses to charge VAT on their invoices at the standard 20% on the net sale amount, but pay back HMRC a lower rate. For example, if you are working as an IT contractor you would charge 20%, however you would only be expected to pay back 14.5%. This percentage varies depending on the industry you are in.

    7. Working from home allowance. If you complete any work from home, you may be able to recover some of the additional household costs such as utility bills as a business expense, which can be done by utilising the home-office allowance. Your accountant will be able to help you understand what and how much you could claim.

    8. Pensions. You should consider paying into a pension scheme where your business can invest pre-tax income, to set you up for later in life.

    9. Childcare vouchers. This tax-free system has been applied to the self-employed from 2014 and helps people who have registered limited companies pay their childcare through the company and claim tax relief on the amount invoiced, therefore reducing the total amount of corporation tax they pay. You can look into this scheme if you are a self-employed parent with a registered limited company, however be aware that not all parents qualify for this scheme.

    10. Personal allowances. Both married couples and civil partners could be eligible for a personal marriage allowance, whereby if one of you is earning less than £10,600 and the other is paying tax at the basic rate, you could receive up to £212 in a tax-free personal allowance.

Copyright © 2015 Rachel Smith, technical writer at Nixon Williams's Vantage Online Accounting.

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