Whether you’re a sole trader or limited company, electrician or web designer, there is one thing true for all businesses…you’re going to pay tax.
At some point, in some way, you and/or your business is going to have to pay tax to HMRC. For limited companies it’s corporation tax. For sole traders, or the self employed, it’s income tax.
The UK tax legislation is written across approximately 6,102 pages – there are a lot of rules, regulations, allowances, reliefs and things to adhere to in those pages. It’s very complex.
This certainty of taxes is true, and we all must adhere to the law. However, we don’t need or want to pay more tax than is necessary, do we? That money is better off in our pocket, rather than HMRC’s – isn’t it?
So how do we make sure that our businesses don’t pay too much tax?
The Right People for the Job
You’re very good at what you do, that’s why you run your business. You’re not a tax professional though – nor should you be! That’s what accountants and tax advisors are for – we do what we do, so you can do what you do.
Using a quality, qualified, accountant or tax advisor is key to getting the overall tax position of your company right, so you don’t have to pay more tax than is absolutely necessary.
As qualified accounting professionals we have to do a number of hours every year for our Continual Professional Development (CPD) to make sure we’re on top of the rules and know any changes so we can best advise you.
As a rule of thumb we often say that we save you more than you spend on us. So, use the right professional for the job.
Records and Bookkeeping
What your accountant does begins with the information you provide them. If your records and bookkeeping aren’t of a high standard, you’re likely paying more tax than is necessary.
What makes for poor quality record and bookkeeping?
- Missing personal receipts and invoices – if you’ve paid for it, but not recorded the cost in the business, you’re not being personally reimbursed and the business isn’t claiming it as a tax deduction.
- Missing other receipts and invoices – this can have a cost and VAT impact (article link) on your business.
- Inaccurate bookkeeping – there are so many issues created by inaccurate bookkeeping, paying too much tax is just one of them. Costs are missed, sales are overstated, the bank isn’t properly reconciled so transactions are recorded twice, or not at all.
- Not having the time, or desire, to keep on top of it – it’s much easier to know what you did last week now, than it is in 3 months time. Leaving bookkeeping for months makes it a hard job to get up to date, and usually results in inaccuracies, which causes so many problems
- Not knowing the rules or being comfortable with your accounting software – again, lead to inaccuracies and incorrect information being recorded in your accounts.
So, how do you combat this?
- Firstly, by using the right software! Tools Receipt Bank are great at helping you stay on top of your paperwork as you go; you can take photos, forward in emails or even connect it to supplier accounts so invoices import automatically.
- Speaking of software, Xero connects nicely with Receipt Bank and allows you to easily keep your bookkeeping up to date as well. It’s user friendly too!
If you’re not operating software, or easy to use software, such as this, this is the first step to help ensure you’re not paying too much tax.
The other thing you can do to ensure you’re not paying too much tax, is to get bookkeeping support. This might be something you’ve always done yourself to save money, but if you’re paying too much tax, and having to spend your own valuable time doing it, does that really save money?
Our bookkeeping services come with Xero and Receipt Bank free of charge and qualified individuals for the job. You get the benefit of this quality resource to get the job you need done – it’s cost effective.
Make sure you’re not paying too much tax!
Also, our annual accounts and business tax service.