In between staying on top of your business operations and tax accounting to meet legal requirements, it’s never easy for small business owners in the UK.
Structure Your Business
As if the bore that comes with sorting out the necessary files and records required for corporate tax was not enough, Her Majesty’s Revenue and Customs’ recent crackdowns on tax fraud and avoidance adds a dimension of anxiety on top of the whole process. What’s a small business owner to do? Veer away from tax fraud by following these simple tips.
A good accountant can help you determine the kind of business structure suitable for you. Whether sole tradership, partnership, or limited company, how you operate affects the kind of tax and national insurance contributions your business needs to pay.
Each structure has their own requirements, concerns, and advantages. For example, limited companies need to post profit before releasing dividends. Some sole traders who run their businesses from their home can claim tax relief as long as the HMRC deems it reasonable. Corporate taxes in the UK might apply differently depending on your company’s structure.
Set up an Effective Record Keeping System
Tax accounting relies heavily on your company’s record keeping. Track everything. The cash flows within your company should always be monitored and documented. Minor purchases and sales could add up to chunks of discrepancies that might cast shadows of doubt over your company.
The HMRC expects companies to keep all their bills and receipts for at least six years. Therefore, store your records in a secure location. Cloud accounting systems are worth looking into, as they have features that make it easier for you and your accountant to stay on top of everything. Even if you have a cloud accounting system, it might still be wise to keep physical copies of your records, just in case.
Remember Your Deadlines
Submit your paperwork accurately and on time. Errors and submitting past deadlines might raise red flags. Have a checklist of the requirements. Your well-kept records and coordination with your accountant are crucial in ensuring that you have everything you need before the deadline.
Work With Your Taxman
Being transparent with the tax office never hurts if you’re doing honest work. Ensure that you see eye to eye, especially about UK tax law changes. Problems could be avoided by letting them know about the things that you’re unsure on.
As a corporate taxpayer, it’s ultimately your responsibility, and not just your accountant’s, to keep track of your company’s records. While it may seem tedious, doing your taxes precisely and on time are business essentials that you need to master.