Each and every business house intends to make as much profit they can and in the process, usually end up suffering from government’s wrath. Remember that though profits are to be earned, it is better not to avoid tax altogether as that will amass huge fines. However, there are plenty of loopholes in UK tax solutions. Only an accountant or a financial adviser can take advantage of these solutions as they are aware of tax laws. If all available tax and legal loopholes are not taken advantage of, there are chances to hand over the profit percentage to IRS.
Here are some strategies that can be observed for minimizing small business taxes:
• Taking advantage of claim on Capital Tax allowance is advised here. Time purchase of machinery, technology and supplies in order to achieve maximum savings. If calculations show that tax minimization is possible by deducting expenses, make sure never to delay.
• Postponing disposal of depreciable resources is also a possibility here. It is better not to dispose business equipment until following year if that helps in minimizing tax liabilities.
• Planning income deferments also help with minimization of business tax liabilities. Putting off or postponing income is advised in case business profits are higher or if tax rates in the following year is expected to reduce.
• Smart tax planning helps to manage expense, thereby helping to meet high profit percentage. The UK tax solutions providers regard it as an extremely smart way of tax minimization. Allow tax implications dictate supply purchase sand equipment upgrades.
• Try and make the most of the Registered Retirement Savings Plan. This helps to minimize small business taxes substantially. This is extremely advantageous and can be considered for small business tax deduction. There are multiple other tax deductions that may or may not be taken full advantage of like office cost, furnishings, start up expenses, travel expenses, advancement through education, affiliations, conferences and insurance premiums.
• Employ family members. Government is quite understanding towards family run business when salaries come under consideration. The businesses need not be required to pay for federal unemployment tax in case business is in the hand of family members. There is little need to hold back on Income Tax or Social Security if the siblings are a part of business. Consider age restrictions because child labour law remain applicable even if they are your kids.
• The UK tax solutions providers advise employing independent contractors so that there is little need to withhold state income tax from their salary. There is no need to provide unemployment benefit to the independent contractors. Make sure that the IRS classifies independent contractors as employees. In case they do so, a request is made to provide payment for tax including fines levied for missed withholding that may or may be aware of. Consult a UK tax solutions provider before an individual is categorized as an independent contractor.
• Contribution to charity also helps in minimizing tax liabilities. Making donations to non-profit groups that work on helping others is in fact a great technique of reducing tax liabilities. This will also help to decrease tax exposure of business.
Remember that no one is exempted from paying tax. However, execution of a proactive and smart business plan to reduce exposure to business tax is a great plan. The small deductions when coupled with tax awareness financial plan, helps a lot with minimizing business tax.
About the Author
Jayson Fox is an accountant by profession and thus wins adequate knowledge on UK tax solutions. He is also a prolific writer and prefers to write on his interests whenever he gets some time.