5 Great Tips To Reduce Your Taxes
The end of the tax year is fast approaching and sole traders and small limited companies should be busy ensuring their 2014/15 tax liability is minimised. To help I have invited chartered accountant Martin Robertson to share some of his top tax avoidance tips. Although most of the tips are applicable to both sole traders and small limited companies tip two differs depending on your business status. I would recommend watching the video that relates you and then scroll down to see the text version of Martin's 5TopTips on reducing your tax bill.
Please note tax avoidance is legal however tax evasion is illegal and we do not recommend nor condone it.*
5 Top Tips to reduce the Tax Bill for Sole Traders
5 Top Tips to reduce the Tax Bill for Small Ltd. Co
Martin Robertson is a director of Martin Robertson Associates, Chartered Accountants in Falkirk and We Are Business Transformers Ltd. Martin Robertson provides accountancy, taxation and business transformation services to small and medium sized businesses so is ideally placed to provide tax avoidance advice to the sole trader and small Limited company. Martin is also a published author; his book Your 60 minute Business Transformation is available as a Kindle download for just £4.99 on Amazon or you can get the direct link on my book eview page by CLICKING HERE. If you prefer a physical copy you can buy direct from Martin's website http://www.mraca.com/ at £9.99. If you would like a FREE copy you can book a FREE one-to-one Know Your Numbers Session with Martin that is worth £147. For details call Martin at Robertson Associates Chartered Accountants in Falkirk on 01324 633 550.
5TopTips To Reduce Your Tax Bill
One (Sole Trader & Small Limted Company)Know Your Numbers. Prepare your financials using accounting software and keep it up to date at least at the end of every month. Two or three months before your year-end pass the figures to your accountant so that they can:
Firstly, give you an idea of what tax you can expect to pay based on the figures.
Secondly, and most importantly they can give you some tax saving ideas which you can implement by your year-end.
Two (Small Limited Company)Extract the profits from the company by taking a small salary and dividends
In the year to 5th April 2015, assuming your salary and dividends from the company are your only sources of income, you could take a salary of £10,000 and dividends of £28,650 and have no personal tax to pay. The company would pay corporation tax.
Two (Sole Trader)Consider running your business through a limited company. Tax and national insurance savings are possible if the business is incorporated and profits are taken by dividends.
Three (Sole Trader & Small Limited Company)Consider making your spouse or partner a business partner. This tip is only relevant if your spouse or partner is actually involved in the business performing a role which is necessary for the business to function properly.
Four (Sole Trader & Small Limited Company)Employ your children in the business as long as they are performing functions necessary to the business and are old enough to legally employ. To justify a deduction against your taxable profits you should pay them at the market rate for the duties performed.
Five (Sole Trader & Small Limted Company)If your business needs to replace vans, equipment or computers and you can find the finance buy them rather than rent them. For example, if you need to replace a piece of equipment costing ten thousand pounds if you get ownership of it your profits will be reduced by £10,000 in the year you buy it. If you rent it for two hundred pounds per month you will only get a tax deduction of two thousand four hundred. To get your tax deduction as early as possible buy these assets before your year-end, not the month after.
For HMRC tax rates and allowances visit:https://www.gov.uk/government/publications/rates-and-allowances-income-tax/rates-and-allowances-income-tax
For a BBC News article on the rules of tax avoidance see: http://www.bbc.co.uk/news/business-27372841
The 5 Top Tips video HMRC Inland Revenue Self Assessment or Income Tax Return tax avoidance ideas for the Sole Trader can be viewed above or by following this link: http://youtu.be/eVwSNRWkkmo
* We recommend you seek professional advice from a qualified accountant before implementing any or all of these tax avoidance tips. The tips are provided for general interest and may help reduce the tax bill of sole traders.
For more top tips for small business visit the Tosh Lubek Channel on YouTube, where you can also leave a comment and subscribe.