Sep 30, 2013 | Accounting, Taxation
Most business owners are interested in how they can pay less tax and keep most of what they earn inside their business.
That, in itself, is no bad thing since business owners and the self-employed will soon realise that overpaying their tax needlessly eats into their profits.
However, with some effort that tax bill can be reduced and the extra money used to develop the business.
The easiest way to find out how to pay less tax is to find an accountant you can trust and here at Yorkshire Accountancy we have the necessary experience to save you ££££s.
The easiest way pay less tax is to spread any potential income tax payments among family members. This is easily done by employing your partner for instant and using their personal allowance, as well as yours,
The tax threshold for 2013/14 is £9,440, and this looks set to rise to £10,000 next year.
With the basic rate for income tax set at 20% you could employ your partner to do your books, invoicing and administration for your business.
Obviously, you have to pay National Insurance on that amount unless they earn less than £149 per week currently, then no NIC is due (though you should be aware that this rate of pay will exclude access to certain state benefits).
It’s also important to note that your paperwork should reflect the employment status of your partner or family member within your business and you will have to follow relevant legislation.
Another effective way of pay less tax for small business owners is to build up a retirement pension pot.
Most business owners are not aware that they can contribute up to £3,600 every year into a pot, regardless of their earning levels, and they can also contribute for their employed partner too.
The law is very clear that you cannot access this pension pot before the age of 55, unless you have very special circumstances.
Consult with your accountant to see what they recommend, after all you are paying for their experience and advice. You may find that they recommend switching funds from low-paying interest accounts into a cash ISA which carry better rates and you will have access to the money in times of need.
It’s also important that you claim all of your expenses from your business, insure you and the business properly and to make sure you don’t pay yourself more than £100,000 a year.
Another obvious idea is to file your tax returns on time and avoid the fines that will be incurred and you should be working with an accountant to ensure that this happens on time and correctly.
Here at Yorkshire Accountancy we are always willing to help clients and potential clients with advice and to pay less tax, so contact us now to see what we can do for you.