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Save on Business Tax With These Tips

Updated on October 11, 2018

1. Take Money Out In A Tax Efficient Way

You should take money out of both dividends and salary. A combo of these is a tax efficient way of taking money out. However, do explore other strategies to help you save more in taxes.

2. Pay Your Spouse A Salary

If a worker earns more than £111 on a weekly basis, then they'll qualify for both an additional state pension and a basic state pension. If they earn less than £153, then no National Insurance Contributions will be made. However, you do have to record all details and then submit those details to the HMRC.

3. Consider Paying National Insurance Contributions Class 2

There is a small earnings exception. If your profits are not greater than the exception, then you won't have to pay National Insurance Contributions Class II. However, you can choose to pay contributions, and you should. Doing this will eventually build your entitlement up to a state pension.

4. Key Employees: Make Them Partners

Are you a partnership or a sole trader? If so, then make key employees partners. This can save you quite a bit in regards to National Insurance. Not only that, but it will tie those employees to your business.

5. Investing In Vehicles & Equipment

When the time comes to invest in business equipment and vehicles, then determine when's the best time to purchase them. Figure out what the best way to pay for the equipment is, too. You might be surprised at how much you can save. Remember, you can experience tax relief quicker when you buy stuff shorty before the year-end of business.

6. The HMRC Should See You As Self-Employed

Are you self-employed because if you are, then the HMRC should see you that way. A one-man show might think they are self-employed, but they want to make sure that the taxman sees things this way. All it takes is one or two customers to determine you are not self-employed.

7. LTD, Sole Trader Partnership or Limited Partnership

You should consider whether your company would be better off as an LTD, limited liability partnership or a sole trader partnership. Sometimes it's better to be one or the other. Limited liability partnerships might be better than LTD or sole trader partnership.

8. Planning Ahead

Are you planning to sell your business at some point in the future? If so, then plan ahead because this can minimize your tax bill. In fact, you could end up keeping most of the money you make from the sale of your business.

10. VAT Registered

Are you VAT registered? If not, then make sure you are actually entitled to remain non-VAT registered. If you have accumulated over £83,000 for the tax year, then you need to be VAT registered. In fact, you need to do it right away, so make sure you are monitoring the sales you're making over the course of 12 months. Here are details of the different EU rates from Vatglobal

10. Consider Switching To The VAT Flat Accounting Scheme

Are your sales less than £150,000, excluding VAT? If so, then consider going onto the flat VAT accounting scheme. Under the flat rate, you won't have to calculate your VAT liability from the invoices issued or received.

Instead of doing that, you pay a flat rate based on the percentage of your sales. This can be a lot easier. Not only that, but you could end up paying less in VAT.

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