Askews have been in the accounting business for almost 20 years. So we know a thing or two about how best to run your business. Here are some accounting tips for businesses that are just starting out.
- KISS. Keep it simple starting out. If you set up as a sole trader, you can claim against your profits for items used in your business even if you bought them before you began trading.
- Lower corporation tax rates may make it worthwhile to become a limited company.
- The current capital allowance scheme enables you 100% allowance on the first £200,000 spent on eligible capital items. If you’re thinking of investing in plant and machinery, you can allow the entire cost against profit for that year.
- How do you intend to take profits from the business? As a small limited company, paying yourself a small salary up to your personal allowance and the rest as dividends could still save some tax and national insurance benefits. It could also be beneficial to pay your spouse for the work they do, depending on their other income sources.
- It’s usually best to run your own private vehicle and then claim mileage using HMRC authorised mileage rates. If you have a limited company, in most cases this will also help avoid higher tax on company cars.
- By running your business office from home you can claim a tax deduction to cover part of your home running costs. HMRC allows £4/week without asking for any evidence. Be prepared to justify it if you think the actual cost is higher.
- By putting your mobile phone in the name of the business then all phone costs are tax deductible.
- By making contributions into a pension scheme, these tend to be deductible expenses for the company and individuals do not pay tax on the benefit of having the company pay them.
- If you employ people, you can use a salary sacrifice scheme to pay for employees’ childcare costs. Childcare voucher schemes are tax-free for the employee and the business doesn’t have to pay employer’s National Insurance.
- If you are married or in a civil partnership, you can each benefit from using each allowance (£11,000 for 2016/17) and basic rate tax bands (£32,000 for 2016/17). You may want to consider transferring income-producing assets (such as rental income) to a spouse in order to take advantage of their lower taxable income.
For more tax saving advice please do not hesitate to get in touch with our experts. Askews Accountants can advise you on the various options available to you and help you make the best choices for your business .
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