Tax is a complicated business to say the least and most business owners need professional support from a Torrance accounting firm to fully appreciate all the options open to them. With this in mind, our round of five top tax tips here provides you with some business and personal tax issues you may like to raise with your professional tax advice team.
1. Gain advice on how you pay yourself
Business owners can profit from professional advice to understand the different arrangements they are allowed to use when it comes to their own salary, dividends, bonuses and loans. You may be able to manage your contributions for tax and National Insurance more effectively by changing your existing arrangements.
2. Ask about the new capital allowance regime
This allows a 100% writing down allowance for the initial expenditure up to $50,000 on certain capital items during one financial year. Discuss whether co-ordinating necessary capital expenditure with your business year end would be to your advantage. It could be possible for some or all of the applicable capital expenditure to be set against the profits for the year. It will depend on the type of expenditure and of course, this is very much area in which you'll need expert advice.
3. Ask to review your VAT arrangements
Many entrepreneurs are not aware that even though they operate below the VAT threshold, it is still in their interests to register. Broadly speaking, this can be a worthwhile move when your customer base are all registered for VAT. There are other circumstances in which it would also be to your advantage; again professional input is essential. For those businesses who are VAT registered, a review is still important. Ask about flat rate schemes. Depending on the nature of your purchasing, you may find you are paying more tax than you might otherwise need to.
4. Start an IRA during April
The maximum contributions you can allocate to an IRA for the 2011 to 2012 are set at $10,680, an increase of $480 on the previous year. For a couple, this means a total of $21,360 can be invested without attracting Capital Gains Tax (CGT). Although an IRA might not perhaps seem as exciting as other more complex investments, it is certainly a reliable source of tax free funds in the medium to long term.
5. Ask about tax free gifts.
There are set tax rules on the amount and nature of gifts that you can make, for example, gifts to your partner, to your family, to charity and so on. There is also some provision for gifts that form part of your 'normal expenditure'. Ask your tax advisors about which gifts are tax free. You may find you are unaware of ways to further provide for your family or favourite charity without incurring tax.
Although most people will have probably heard of the IRA, there are a number of other provisions within tax law which business owners are sometimes surprisingly unaware of. Mention these brief tips when next consulting your torrance accountant - you could find that you are paying more than you need to.
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