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5 Ways to minimize Tax on your small business

By 6th March 2019No Comments

white piggy bank

It’s time to dust off the Benjamin Franklin quote about death and taxes and wonder if the two aren’t more similar than we think. We can put off death to some degree with the combination of a healthy diet and a regular physical and mental exercise regime.

Taxes can be treated with a similar regime of health checks for your business. With proper controls in place, you can reduce your tax bill and save money at the same time. Sounds counter-intuitive and too good to be true? Not at all.

1.  Personal Tax Planning

For a small business owner, there is a balancing act between corporate and business taxes. Choosing  your company structure is a far from straightforward decision but should you opt to become a limited company, there are some advantages to be taken.

The most important of which is your own income. Finding a balance between salary and dividend is key. There is no social security impact on the latter for the individual or the company, so it saves money for both.

Reduced sunk running costs give certainty to cashflow; your requirement to meet the monthly payroll is reduced, freeing up money to be invested elsewhere or held in reserve.

2.   Make Sure You Claim All Expenses

Recording all your expenses seems like common sense but it is easy to overlook them or lose a receipt. In a paperless world, we seem to be producing more paperwork than ever.

However, good practice for storing receipts, as well as recording them on expense claims forms, is vital. Timely submission of them both for payment means the documents are registered and recorded on your accounting software.

The key to this is making sure you and your employees know what constitutes a business expense and are aware of how the taxman views them. Most are tax-allowable but be wary of those such as entertaining which aren’t.

3.   Keep Your Accounting Records Up-to-Date

Tying in with the above, it is a legal responsibility to keep proper financial records. The timely recording of income and expenditure, classifying it to correct expense lines and cost centres, gives the owners control of the business.

Management reporting is only as good as the information processed through the accounting software. It’s an area where the business can quickly slip behind with publishing houses constantly updating and upgrading their products.

It’s why the leading businesses give themselves an edge over competitors by using cloud-based technologies. They get the most up-to-date software, properly maintained and fully expensed on a monthly basis. Fully tax deductible, the business isn’t left with an outdated asset at the end of a three-year period.

Instead, your business carries on using the latest software, accessible easily by all accredited workers from anywhere, be that at home, in the office, or on the road.

4.   Claim All Tax Reliefs and Credits

Time to call in the experts and let your tax advisors earn their corn by claiming all the relevant tax allowances and credits. It’s their job to do that and their fees are all tax deductible.

5.   Claim Research & Development Reliefs

One key area for your business is Research and Development. This used to be the preserve of men in white coats with clipboards but not anymore.

Recognising that all businesses are capable of R&D spend, there is a 25% relief on qualifying spend. It’s vital you keep proper records to make this information easily accessible; collaborate with your advisors to make that happen!

With a little effort at regular intervals, keeping your taxes under control can make your life easier. And by using  software, it becomes a breeze.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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