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Taxes are important, we all need to pay them in order to have the kind of society we would like to see, but when you run a business, paying more tax than you need to does not make much sense, especially if you are a small business looking to turn a profit or minimise your outgoings so you can stay afloat.

Managing one’s business accounts has never been easier thanks to online accountancy services, and yet too many companies are paying more tax than they really need to simply because they are not in the know and they are not doing a number of things that would reduce their tax burden. 

Below, you will find some of the most common ways you might be able to reduce your tax bill in the future:

Tax planning

Companies who want to reduce their business tax bills should always take part in tax planning, aided by a qualified accountant or financial planner. Businesses that conduct tax planning each year are more likely to know the tax rules and more likely to plan for every eventuality, which means they are less likely to get caught out by paying tax on things they don’t really need to. It also helps them to avoid underpaying tax which can be a big problem that gets the business into hot water, too.

Claim less on your expenses

This might sound like a strange suggestion when you are looking to save money on your taxes, but it is true to say that you can often reduce your tax burden by claiming less on your expenses.

Most people believe that the more they claim on their expenses, the lower their tax burden will be, but this is not exactly the case. For example, if you are to claim the maximum amount of expenses for your business premises as possible, you would not be able to benefit from the lower 10 percent tax rate where you to dispose of the property at a later date.

Of course, this is just one example, and there are many more where claiming fewer expenses may benefit a business, so it is always a good idea to talk to your accountant about any instances where claiming an expense scold cause you to pay more tax further down the line.

Paperwork Efficiency

If you want to ensure that your business does not end up spending more than legally necessary on its taxes, then it is a good idea to ensure you handle paperwork as efficiently as possible.

These days, you can digitize your record keeping using online accountancy options that will enable you to log all of your invoices, receipts, and other expenses quickly online and in order. That way, they will be quicker to deal with, and you will not end up losing or misplacing important invoices that you will then have to spend countless amounts of time chasing up if you don’t want to fall foul of HMRC. The tech is there so it makes sense to use it.

Use taxable allowances efficiently

In the UK, at least, most of us have taxable allowances that we can use each year, including things like the capital gains tax allowance, dividend allowance, and income tax allowance, all of which can save us a huge amount of money. In fact, you could save tens of thousands of pounds by using all of the tax allowances available to you as a business owner each year.

The key is to know which tax allowances are available and what you need to do in order to take advantage of them, and of course, a goods accountant is probably the person best placed to deal with these kinds of queries, which is why a good accountant is worth their weight in gold.

Claim tax relief

Most of us look upon the tax man as a hate figure; someone who is out to get as much of our money as possible no matter what, but actually, HMRC does offer lots of good schemes, and tax relief is one such offering.

You can often claim tax relief if you run a small business, with benefits including being able to claim more in expenses that you actually paid – under strict guidelines of course – and protection for business investments that will ensure between 30 and 60 percent f your money is safe. 

Learn what these tax relief schemes are and use any that are available to you under the rules for a much-reduced tax bill and a bigger bottom line.

Use tax-efficient staff reward schemes

Rewarding employees is a great way to ensure their loyalty, and boost their productivity, so if you want to reduce your business tax bill, taking advantage of tax-efficient employee reward schemes is sensible. Financial benefit rewards, for example, are tax-exempt up to £5,000 and since they will encourage your employees to work harder, they will add more value to your business than the equivalent paid in tax could ever hope to. Use them.

Speak to a tax adviser

Speaking to a specialist tax adviser will help you to put these ideas into action, and find out about more schemes and tax laws that you can use to reduce your tax bill even further.

Do not be tempted to lie

Lying about your income as a business and cooking the ebooks is one of those things that should never be considered when trying to reduce your tax bill. Many people try to cheat the taxman each year and most of them are found out eventually. Large fines ns prison sentences are possible consequences of doing so, which is why it is absolutely not worth it and something that no one with a conscious would ever advise.

Reducing a company’s tax bill can mean the difference between making a profit and not, especially in those early days, so business owners everywhere should be doing all they can to reduce their tax bills and ensure they are not paying a penny more than they should be.