Tax Planning Tips for Small Companies in the UK

Taxation and taxation laws have never been something everyone has been able to understand clearly and comprehensively!
Do anything but never evade tax. If this was the rant you heard as a working professional, be sure to hear this hundred times if you are a businessman, especially if you own a small company!

Being a company owner though, you definitely need to understand the entire concept of taxation and how it works. Remember, if your company is found defaulting on tax, you could be penalized heavily. Your company?s license could be revoked, and worse still, you could also face the prospect of going behind the bars. Not to mention, the stiff financial penalty in these cases!

Though, you would find a lot of advice about tax from a tax adviser. But, here is a quick dig on tax planning tips for small companies in the UK.

1. Determine the kind of company you operate. Is it a sole proprietor or a Limited concern? Do you need VAT (Value Added Tax) registration for your company? Many other questions like these need to be answered for taxation.

2. Prepare your VAT Returns sheet completely. Cover each and every transaction possible on the returns sheet. Finally, when you are done with that, submit the sheet to a firm that will check and audit the sheet to find any loopholes. If any are suggested, you should look at fixing them.

3. Does your business have its fair share of capital gains? Have you had share-splits, buybacks and other such schemes being related to your company? If yes, they also fall under the gamut of Taxation. Please list down all the buybacks and share splits that have happened in the current financial year.

4. Profit and Loss ? Okay, this is one ingredient, which you will find a lot of CEOs breaking their head over time and again. And why! The simple reason for that is any kind of profit would be taxed. And would you believe it ? In most cases, losses are not taxed? Well, that could easily tempt you to declare loss year after year to save taxes.

But ask any company owner and he would tell you that declaring losses is not good for the company in the long run. After all, your share holders would be eagerly looking at your company?s balance sheet closely. If they find you declaring losses (For whatever reason), they might as well take their shares back!

Last but not the least, if you find all of this time consuming and too technical, you should think of hiring a financial expert. You could hire one on the payroll of your company or even outsource this task. Having a financial brain working behind these tax numbers could alleviate a lot of burden on your head. As they say, ?Some things should be left for the experts to do?. And taxation is definitely one of them!