Corporate tax planning is imperative, ensuring you never fall behind on payments or end up on the wrong side of the law. There are many different aspects to consider, from meeting compliance demands to determining the best tax structure for your company.
This is why it is advisable to use invoicing software throughout the year to track payments and the services of a high quality chartered accountant, as they will have the experience and skills to put together an effective tax plan and ensure it is continually maintained. But, first of all, let’s take a look at some top advice all business owners need to be aware of when it comes to year-end tax planning.
- Deductions – A lot of business owners miss out on the opportunity to reduce their taxes because they are unfamiliar with the deductions that are available to them. All companies have the ability to deduct any expenses that are considered necessary and ordinary. For instance, if you have gone on a trip that combines both pleasure and business, you can deduct the travelling costs and all of the expenses that have been business related.
- Know how to classify your business – This may sound obvious, but you wouldn’t believe how many businesses are filling in the incorrect forms and paying the wrong types of taxes. There are different rates and tax liabilities for different types of companies. Do you run a limited business? Do you have a partnership? Are you a sole proprietor? You need to know how to classify your company if you are to plan your taxes effectively.
- Do your research – There is no such thing as too much research, especially when it comes to something as important as your taxes. Taxes are not to be taken lightly, and many business owners make this mistake, assuming that the government will never investigate them. However, there are fines and penalties in place if you do not carry out your commitments correctly. Thus, make sure you are fully aware of your tax obligations. This is why it is a good idea to hire a chartered accountant. By doing this, you can have the peace of mind that everything is handled above board and in accordance with the law.
- Employee benefits – Nowadays, employees hold more power. If you are to retain your best talent, you need to ensure you have a retention scheme in place, which will include various perks that are designed to lead to employee satisfaction. However, you will need to do your research to determine what benefits are taxable and what benefits are not, to make certain you aren’t paying an unnecessary amount.
- Industry specific opportunities – There are many different tax breaks available to businesses based on the industry they are involved in. It is up to you to make the most of these. This is something your chartered accountant will be able to assist you with. They will show you the opportunities you have available to you based on your sector.
- Put together an effective tax structure – As is the case with all elements of financial planning, you need to have an effective structure in place to ensure everything is handled efficiently. If you don’t, you’re assured to miss out on opportunities or make errors along the line.