An Insight into Tax Planning for UK’s Small Business Owners
The process of considering various tax possibilities to determine when and how to conduct transactions, whether business or personal, to reduce or eliminate tax liability is said to be tax planning.
Tax planning is a continuous process, and honest advice from a credible source like SK Accountants and Tax Consultants is an asset for any business. A lot of small business proprietors don’t take taxes seriously till the time they have to see their accountant once a year. However, to plan tax avoidance is legal, whereas tax evasion, which is a rebate in tax through concealment, fraud, or deceit, is not.
Following are four possible areas where IRS analyst generally focuses on determining any possible fraud:
Failing to report a significant amount of income earned, such as shareholders failing to report dividends
To profess fabricated or forged deductions on a return, such considerable overstatement of travel expense by a sales representative
Irregularities in accounts such as failure in keeping adequate business records
Allocating income in an improper way to a related taxpayer
Tax Planning Strategies
There are many tax planning UK strategies available to small business owners, a few of which focuses on the owner’s tax situation, and others are at the business. Some of which are as follows:
Decreasing the amount of taxable income
Reducing the tax rate
Controlling the time for tax payment
Adducing any available tax credit
Averting common tax planning mistakes
Authorizing the effects of Alternative minimum tax
To plan adequately, you are required to anticipate both your personal and business income for the coming few years. As soon as you know your estimated income, you may then easily estimate your tax bracket. Improved estimates may result in successful tax planning UK endeavors.
Maximizing the Business Entertainment Expense
Entertainment expenses are logical deductions that can reduce your tax bill and save your hard-earned money. To qualify for a tax deduction, the business should be conferred before, during, or after the meal, and your surroundings must be favorable to the business motive. For example, a small and quiet restraint would be appropriate for a business dinner, whereas a nightclub would not.
Boost your Business Deductions
IRS has allowed a 50% deduction on entertainment expenses. However, to get benefits from this offer, businesses must maintain good records, and a business meal must be organized to conduct a specific business.
Essential Business Automobile Deductions
Suppose you are using your car or vehicle for business purposes, such as going to business meetings or visiting clients away from your workplace. In that case, you may experience taking a few deductions for the cost of maintaining and operating the vehicle. You can calculate car expenses using either the actual fuel expenses or the standard mileage rate. And if you own two cars, another way to boost deductions is to include both cars in your tax planning UK. This approach can result in significant deductions. But make sure to keep accurate records of mileage, receipts, logs no matter whichever method you go for.
Advance Your Bottom Line While Working from Home
When you follow the work-from-home paradigm, the deduction is unarguably one of the most difficult deductions ever to come across. A few are the tips that can make home office deduction less traumatic that includes:
• Prominently presenting home business phone number and address on business cards
• Business guests must sign the guest book while visiting the office
• Write-off long-distance phone charges
• Maintain time and work activity log
• Manage the receipt and paid invoices
Keeping and maintain a record of receipts makes it so much easier to regulate the percentage of deductions later in the year.