Save Substantial Tax!
Key areas to consider in business that can save you substantial tax.
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Start by Asking the Right Questions to your Advisor Remember that only YOU know your business, what it does and where it is heading. A good tax advisor will formulate tax planning and strategies AROUND your business and not the other way round.
Questions that you need to consider BEFORE talking to your advisor...
(The red comments look at the areas of tax)
- What is your business and what do you do? Are your service or product based? General Tax
- Where are your customers based? UK, Europe or outside of Europe? VAT 3
- Does your business have to be based in the UK or are you an internet-based business that can be situated anywhere in the world? Residency Of Business
- Do your customers expect to be invoiced by a company? This will obviously affect your options
- Who are your customers? Businesses or Individuals? VAT
- What and when is your exit strategy? Forward thinking tax planning
- Are you already earning an income elsewhere and if so, are you a 40/50% tax payer? Profit extraction
- Are you married and if so, does your spouse work? Tax Efficient Profit Extraction
- What do you expect your NET PROFITS are currently and what will they be in 12-months time? Current trading entity and tax strategies Accountability
Understand the Different Trading Entities Available in the UK and How They are Taxed?
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Trading Entity
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Tax on Profits
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Additional Tax Suffered
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Sole Trader
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Income Tax
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None
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Partnership
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Income Tax on profit share
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None
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LLPs
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Income Tax on profit share
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None
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Companies
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Corporation tax
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Income tax on money extracted from the company
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There are certain areas to which ALL BUSINESSES are bound to regardless of what their chosen entity is.
VAT: All business must (subject to the nature of their business) register for VAT if their turnover exceeds the current threshold. This is currently £73,000.
PAYROLL: To be done for all employees of the business. Any payments to employees must have the correct tax deducted and this must be paid to HMRC by the 19th day following the month end.