With so many expenses in running your small businesses, taxes are one more expense to reduce. The system has actually been set up to help you as a small business owner succeed, even if it might not feel that way sometimes.
When completing your company tax return, it is advisable to seek the service of a professional tax accountant who can help you understand which reductions are available to you.
Here are a few situations you can legally reduce your tax bill.
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1. Employ Family Members Or Spouse
You can take advantage of the provisions made by the HRMC in employing relatives. It gives allowance for tax reduction when you hire the services of your children or spouse.
Chris Conway, who is an accountant and financial specialist and managing director of Accounts and Legal, shows how you can eliminate income tax paid to your children. So, if you operate a family run business make sure you know which deductions are available to you.
2. Deduct Equipment From Work
Don’t forget to record all of your expenses in running your business. There is some equipment you can buy that will require tax deduction from your profits made.
When making business purchases such as buying a new desk, computer, stationery, printer, or software, make sure you keep your receipt and make records of money spent on equipment.
Let’s say you spent $5,000 on equipment and made a profit of $15,000. If you provide the $5,000 invoices spent on the equipment, then you will only have to pay tax for $10,000.
You will maximize your profits when you know about the legal ways to pay less on taxes and save money.
3. Deduct Business Expenses
If your business requires you to travel a lot, then you are eligible for travel deductibles.
However, you have to justify that these travels are business related. This is because personal travel is not included and do not enjoy such benefits. With this in mind, you can take advantage of the business travel deduction and mix personal travel with business travel.
Always consult with a tax accountant or professional when recording such a tax deductible. HRMC is watchful these deductible and any mistake can result in huge penalties.
4. Deduct Training And Subscriptions
Do you know that training courses and subscriptions to business-related issues are regarded as business expenses?
When you go for professional courses or train your staff, you can add these activities as a business expense and remove the cost from taxation.
When it comes to magazine or newspaper subscriptions for your business, you have to be careful. Make sure that they are strictly used for business and not for personal pleasure.
5. Deduct Auto Expenses
Small businesses usually forget about deducting their auto expenses, but by neglecting to do this, you are missing out on a huge amount of deductible.
Keep track of your mileage and record every single business trip and check out the expense. Then you will understand how much you would have saved these years on the auto deductible.
Use the app MileIQ to help keep track of your drives on autopilot. It also helps you sort your drives in terms of business or pleasure and tracks what dollar amount you can earn back as a result of tracking your miles!
A lot of small businesses are paying too much in taxes that they could have avoided legally. An understanding of tax law is essential to make more profit in your business. Ensure you hire the services of a professional to take care of your accounts.