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Last Updated on by Noni May
It isn’t uncommon for an entrepreneur to set up a business as a self-employed individual. In fact, it’s very common because it is a very lucrative way of making money if done properly.
The major issue that will hold you back is your tax contributions. As a small firm, there is no doubt that a large tax bill could hold you back. For most self-employed business owners, it is among the biggest expenses each year. It’s obvious that you want to cut it down, but don’t know where to start. After all, there is no need for a fine or a jail sentence.
But, what if you found several ways which did it legally as well as effectively? What if it was possible – would you be interested? Good, because here’s a selection of them are in the list underneath.
The first step is to accept that you’re a novice with little to zero experience of business tax. As such, you have no business trying to figure out which methods are the best for the company. The second step, as a direct result of the first, is to find an accountant. Good number-crunchers are essential because they have knowledge and experience. To be dramatic for a moment, they know where the bodies are buried. But, it isn’t just their mastery of numbers that comes in handy. The best ones also understand how the industry works, which is a massive plus. Simply put, they know what they can do and when to maximize your earnings. The relevant phrase to keep in mind is ‘certified.’ A casual bookkeeper or someone who dabbles in accounting isn’t up to the standard.
Upon starting a business, you should have come up with a plan. Your plan is like a roadmap which guides you from the beginning of your journey to the end. Whenever you get lost, you can simply consult it to refresh your brain and get back on track. Well, a tax strategy is the same thing. It’s a system that the business puts into place to ensure that it doesn’t pay too much. For example, lots of small businesses like to pay in cash because it’s easier and simpler. Your accountant, however, should point out that you can write off some of your contributions with a credit card. Now that you have a certified professional don’t be afraid to meet with them to thrash out the way forward.
Probably the easiest and most effective way to lower your tax bill is through deductibles. Every firm pays for products and services which the government strikes from the bill at the end of the year. It’s their way of giving businesses leeway, and it’s something to exploit. What you need to remember is that you can only do it if you have the receipts. Companies that don’t keep a record won’t be able to prove what they did and didn’t pay for, and the taxman isn’t a naive person. In fact, he might decide to fine or charge you with a crime because it is fraud. There is an amount where they are willing to turn a blind eye, but it’s only small. Any significant expenses need a proof of purchase.
The tax industry is always changing and evolving. Even though your accountant should be on the ball, there is nothing wrong with doing a bit of studying. Reading blogs by people like Michael Banks and co. is a very simple thing to do thanks to the internet. All it takes is a quick search and you will have all of the information you need at your fingertips. Sure, there is no reason to act on it until you speak to your accountant. However, it’s always good to have a certain amount of knowledge on a controversial subject. Hopefully, it will stop you from making serious errors.
Whether it’s wrong or not, the authorities won’t inform you about your taxes. Okay, there might be a commercial on TV, but no one will pat you on the shoulder and make sure it’s done. You’re an adult, so it’s your responsibility to hit the deadlines. The problem is that there are so many for business owners. Not only do you have the firm’s tax return to file, but you also have an individual one. As a result, it’s easy to mix and match and then miss a cut-off date. All you have to do is write it down or set a reminder on your mobile device.
Then, it won’t take you by surprise.
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