10 tax tips for small business owners

tax tips for small business owners

As a small business owner in the UK, you will be expected to comply with certain tax regulations. It can be overwhelming to stay up-to-date on all of them and this can result in costly penalties and fines if incorrect returns are filed. But one way to avoid these issues is by arming yourself with an understanding of the tax laws that apply to your company. Here we provide 10 essential tips for managing taxes as a small business owner in the UK – allowing you the assurance that when it comes time to submit returns, you'll have everything covered!

Tax Tips 1 - Register for Self Assessment with HMRC

As a small business owner, it is important to register for Self Assessment with HMRC. This will allow you to report your income and pay your taxes.

Tax Tips 2 - Keep accurate records

It is essential to keep accurate and up-to-date records of your business finances, including income, expenses, and any taxes paid. This will make it easier for you to complete your Self Assessment and ensure that you are paying the correct amount of tax.

Tax Tips 3 - Claim expenses

You can claim certain expenses as a deduction from your taxable profits. This includes things like business travel, training, and equipment. Make sure to keep receipts and records of all eligible expenses.

Tax Tips 4 - Use tax-efficient payment methods

Consider using tax-efficient payment methods, such as salary sacrifice schemes or pension contributions, to reduce your tax bill.

Tax Tips 5 - Claim tax relief

If you use part of your home for business purposes, you may be able to claim tax relief on your household expenses via a use of home as office claim.

Tax Tips 6 - Consider VAT registration

If your business has a turnover of more than £85,000, you will need to register for VAT. However, you may also want to register voluntarily if it is beneficial for your business.

Tax Tips 7 - Use off-payroll working rules

If you are a small business owner who engages contractors, you will need to follow the off-payroll working rules (also known as IR35) to ensure that the correct amount of tax is paid.

Tax Tips 8 - Use the Annual Investment Allowance

The Annual Investment Allowance (AIA) allows businesses to claim tax relief on certain capital expenditure, such as equipment and machinery. Make sure to take advantage of this allowance if it applies to your business.

Tax Tips 9 - Make use of tax-free allowances

There are several tax-free allowances available to small business owners, including the Personal Allowance and the Married Couple's Allowance. Make sure to claim these allowances if you are eligible.

Tax Tips 10 - Seek professional advice

If you are unsure about any aspect of your business's tax obligations, it is a good idea to seek professional advice from an accountant or tax adviser. They will be able to provide guidance and help you to ensure that you are meeting your tax obligations.

As a small business owner, it’s important to stay on top of your taxes and understand all the different deductions you may be eligible for. We hope these 10 tax tips have been helpful in getting you started on the right track.

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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.