Most businesses are frustrated that most of their hard-earned money goes to Tax. Companies must understand that careful planning and understanding Tax & updates will help reduce tax. AKKS Accounting and Tax Services educates the business on effective strategies to help you retain more of your income and help lower taxes so you can have funds for future investment, retirement, or planning a dream vocation. We educate you and help you reduce stress and anxiety during Tax season.
Understanding terms like corporate tax, Deduction, and credit
Unlike the tax bracket for individual earnings on salaries, wages, and pensions, the corporation tax applies to limited companies and other business entities based on the company’s profit. A small Profit Tax of 19% applies to the company if the profit is £50,000 or less, 25% applies if profits exceed £250,000, and if profits lie between £50,000, and for companies with earnings between £50,000 and £250,000, the tax rate doesn’t jump from 19% to 25% suddenly. Instead, Marginal Relief acts like a gradual increase.
AKKS accounting educates and suggests some essential strategies to reduce taxes and do stress-free business.
Maximizing Deduction: – The essential rule or point to running a small business is to make sure of two things
a- Record the expenses
b- Keep an eye on tax law changes
(a) Record the rate:- Tracking and filing meticulous commercial enterprise costs consisting of the rent, utilities, workplace supplies, devices, car expenses (primarily based on business use), or even domestic workplace is the fundamental rule to maximize the Deduction. It’s crucial to keep receipts and invoices for all deductible expenses.
Example
Let’s take an example of an “organic vegetable basket “and see how they maximize deduction deductions.
Monthly Expenses List Yearly Deductions (assuming 12 months):
| Monthly Expenses List | Yearly Deductions (assuming 12 months): |
| Rent: £2,000 | Rent: £2,000/month * 12 months = £24,000 |
| Utilities: £500 (assume 75% for business = £375) | Utilities: £375/month * 12 months = £4,500 |
| Office Supplies: £50 | Office Supplies: £50/month * 12 months = £600 |
| Employee Salaries: £3,000 | Employee Salaries: £3,000/month * 12 months = £36,000 |
| Employee Benefits: £500 | Employee Benefits: £500/month * 12 months = £6,000 |
| Marketing: £200 | Marketing: £200/month * 12 months = £2,400 |
| Ingredients: £1,500 | Ingredients: £1,500/month * 12 months = £18,000 |
| Total Potential Deductions | £91,500 |
£91,500 is the potentially deductible total business expenses of the “organic vegetable Basket.” By subtracting these deductions, Organic Vegetable Basket’s taxable income will be lower, potentially reducing the tax they owe. Documentation and compliance with IRS-approved categories and regulations are essential, and consult with AKKS Accountants & Tax Advisers to ensure all legitimate deductions are maximized.
(b) Keep an eye on Tax Law Changes:- It is very important to keep updated with tax law changes and plan accordingly. For example, if you are planning to purchase equipment, then check if the equipment is financing qualified; if it is, then it will be eligible for tax-deductible under section 179. So, changes in law will help you utilize the expanse correctly.
Utilize Tax Credit
The tax credit is the amount the government pays to reduce the income tax that small business owes. It helps maintain and improve companies’ cash flow. It is called Universal credit, which includes work Tax credit, R&D Credit, and Employment Allowances. AKKS, as a small business accountant in the UK, has excellent knowledge of how to help you get paid from different credit allowances paid by HMRC.
Optimize Business Structure
To understand the optimization of the Business structure, Small businesses must know what business structure is available and which will benefit them in their circumstances, i.e., being a sole trader, LLP, corporation, etc. We will help you choose the best structure for your business and help you understand the implications of different taxes, whether it is capital gain tax, income tax, or inheritances
Plan for Retirement
Understanding the SIPP (Self Invested Personal Pension) and EET model (exempt, exempt, taxed) is essential. Your contribution to a retirement plan, i.e., 401(k), will help you reduce income tax and, in the future, will be hard-earned savings. AKKS enables you to determine the best plan for your tax exemptions.
Stay Informed and Get Help from AKKS Accountants & Tax Advisers
With every New Year or new government tax policies modified frequently, and if you are not informed, you may not benefit from these modifications.
AKKS Accountants & Tax Advisers help ease complex tax filing jobs for small businesses in the UK and provide personalized guidance advice for your business.
The above are common strategies; contact us for more detailed customized guidance for your business, as each company and situation has its circumstances. AKKS experience and knowledge led you to business success by implementing the best strategies.