A do’s and don’ts playbook of tax for start-ups
Failure to plan for business taxes can cost you money. It’s essential that as part of your planning for your new business, you build in steps to minimise you tax exposure.
Here’s the fundamentals of what you need to do and not do:
Ensure you get the legal structure of your business set up correctly from the outset. As I’ve said many times, getting your structure wrong when you kick things off has the potential to cost you a lot down the track, particularly when you come to sell.
Claim tax deductible expenses. You’ll need to set yourself up for tracking these as they come in. A shoe-box full of receipts might be comical, but it’s not very smart. Get onboard with a digital expenses service like Receipt Bank.
Take advantage of capital allowances. You might be surprised what is allowed. Even if your capital outlay is minimal, you may still be able to make some savings. Every little helps as they say.
Make the most of any available tax tax reliefs. Don’t know that they might be? Find out.
Reduce your capital gains tax liability. There are numerous completely above-board strategies for achieving this including things like ensuring eligibility for Entrepreneurs’ Relief resulting in a Capital Gains Tax charge of less than 10%. Get guidance on the best option for your particular circumstances before making any decisions.
Get advice on the most tax-efficient exit from your business. There are so many ways to cut this cake. You will no-doubt take legal advice at this stage. I’d argue that good financial management advice is just as important, if not more so.
Neglect business year end planning. When you’re under-the-pump and working more hours than you thought possible, year-planning can easily fall by the wayside. But if you let it slide, it can really hurt your business. A good accountant can take a lot of weight off your shoulders here.
Never let tax breaks persuade you to make a poor business decision. They can lure you into doing things that might save you tax, but add nothing to your end-goal.
Involve family members in your business without careful consideration and professional input. They may bring support - both financial and emotional - and even a place to sleep - but you need to set clear boundaries to avoid potentially difficult to answer questions from the tax man.
Completing your self-assessment returns without getting a heads-up. Tax is complicated, that’s just the way it is. Getting a little advise won’t cost much, but it can make a considerable difference.
Forget to have your PAYE and national insurance contributions setup correctly. Get these wrong and there are big consequences. Some things are best left to the pros.
Choose the best VAT scheme. Did you know there were a variety of VAT schemes? Some are a better option for you then others. Make sure you know which one is right for you.
Of course, there are many other tax considerations you’ll need addresses as your business matures. Play the tax game right as you move forward and you won’t regret it.
To find out more about how we work with serious startups, have a look here. Or you can call Acconomy on 01202 678 993, or even email Nigel directly on firstname.lastname@example.org