Taxes are an unavoidable reality that every individual and business must face. Businesses that are starting out especially feel the brunt of taxes, because they will always appear huge when seen alongside relatively small profits. However, there are ways to ease the burden of paying taxes, and they’re surprisingly simple. Follow these tips to get huge savings in taxes over time.
File and pay taxes on time
This may seem like a given, but failure to file taxes comes with a fine of up to £100, and it will keep growing the longer you take to file. Failure to pay on time has a penalty of 5% of the outstanding tax after 30 days of non-payment. Filing and paying taxes on time ensures that you will never have to pay more than you should in taxes.
Use tax software
Even if you file and pay taxes on time, preparing taxes by hand leaves it very prone to human error. Up to 21% of paper returns have errors, which can result in unintended penalties or wasted time redoing your tax returns. Tax software makes the process much easier, faster, and error-free.
Donate to charity
Certain charities and non-profits are qualified to receive tax-deductible donations. The important thing to remember is that donations need not be in the form of money, it can be goods or services. For instance, you can donate old gadgets to charities that need them. Just make sure that you receive acknowledgement for your donation, which is necessary when claiming your tax incentive.
Hire fewer people
Having fewer employees means fewer people to withhold taxes from, as well as lower expenses for social security, healthcare, and bonuses. You can instead outsource some of your office functions, for example by employing the services of an offshore call centre to handle customer service, or Central London accountants for your bookkeeping or tax preparation.
Take advantage of tax reliefs
There are several types of reliefs that your business can take advantage of depending on its nature. For instance, your business may qualify for a research and development relief for projects that help advance science and technology. Patented inventions by your company can claim some taxes from the profits back, and creating certain forms of films, programmes, and certain forms of media can grant a creative tax relief. However, there are limitations and guidelines that must be followed, so check with HMRC first.
Claim business-related expenses
There are plenty of expenses that you can claim in order to reduce your business tax, and some of them will require a bit of creativity. If you use part of your home as an office, you can claim a portion of your house costs like electricity, water, mortgage, and other home-related expenses. Similarly, if you use your car for business-related purposes, you can claim mileage for it, as well as parking and tolls. You can even claim the cost of food and drink, parties, equipment, subscriptions, and training, as long as they are used for business.