Not too technical things you can do to save taxes
One of the most frequent questions we get asked by our clients how can I save taxes? Without being too technical there are quite a few simple things that you can do to help save taxes. You don’t need you to have any accounting knowledge, it’s just doing the simple things consistently for your business.
Make sure you know what you can claim for?
This question might appear to be more technical than it actually is. You simply have to ask yourself is this something I am buying for myself or for my business? Do you need this for your business? For example if you are buying a new laptop for working, that is business. If you are buying a table for your home, that is personal.
If what you are buying is going to be used in your business, then it is something that you can claim in your accounts. This is a very general rule, but it is a good starting point.
This is one of the biggest areas that you will find in your business and one that we will talk about in many other blog posts. But to understand and know what you can claim for is going to help you a lot to save taxes.
Keep your receipts
One of the easiest things that you can do to save taxes is to make sure that you keep all of your receipts. Regardless of how small the amount is you need to keep the receipt to prove what you have paid for in your business.
This is even more important if you pay for something with cash. If you lose a receipt that you have paid cash, you have no way to prove what you paid, if it is on your bank card or credit card it will be on your statement. It is much easier if you pay by a card for everything in your business if you lose the receipt we have the amount that is paid on your card statement.
You need to be able to keep them in an organised way. Our preference is to use a software app like Dext to keep all your receipts safe, if that is not possible to have a folder that you keep all your receipts safe in is essential.
You need to make sure that you keep them safe and that we can have them once we are doing the accounts or we are doing your vat returns.
What if I don’t have any receipts for the expenses I want to claim?
There will be expenses that you have where there will be no receipts or paperwork to prove the expense that you are claiming. These can be things such as mileage, if you are driving to see a client or for a meeting. You will need to keep records of the mileage you have driven to show as evidence for this and claim at the rate of 45p per mile for the first 10,000 miles each year and 25p per mile after.
File early
Having the intention that you are going to file your accounts early will make sure that you keep your paperwork and books up to date. Filing early makes sure that you don’t have to pay any filing penalties. Late filing penalties can very quickly increase for you and your business.
Filing late accounts with Companies House will mean that you have a penalty to pay, so will filing the corporation tax late, VAT and Self-Assessment. It is important to make sure that they are filed on time and that you pay the amount on time as well.
Paying taxes late will also cause you to suffer penalties and pay interest on any late payment that you make.
Save money to pay your taxes
Knowing what taxes you have to pay and filing them early is important, but also making sure that you can actually pay them is just as important. You need to make sure that you have the money saved to pay the taxes that are due. You need to have a separate savings account to save each month so that you can pay the taxes when they are due.
One of the very first clients we had, used to transfer £200 in to a savings account each week to save for the vat when it was due. It was a very simple idea that he had, but it worked well and he could always pay it when it was due.
You may need to transfer more or less than that, but just making simple steps like that can have a big impact on making sure that you can pay the bills when they are due.
Put time aside each month to do your books
Make sure you take time to do your books each month. Keeping your books up to date is something that you need to do, it is easier to do this as soon as you can. It is much harder to do once the year has ended you need to be doing it as you go along.
It’s easier to do the books if you spend a couple of hours each month doing them. Having to sit down and spend three days doing them at the end of the year will make you not want to do them. Schedule time in your dairy to do them each month. Set aside an afternoon or if needed a Saturday morning.
Doing simple things can make a big difference to your tax
Doing simple things can make a big difference to the tax that you are paying. You don’t need to have a vast amount of accounting knowledge. Just keeping the receipts and books up to date can help you.
Consistency will help you do this. Having a time each month that you spend a few hours doing this will keep them up to date and make sure that you can file early and not pay penalties and interest for late filing.
Next Steps..
If you want to discuss how we can help you save tax and help you keep your books in order please arrange a call so if we can help.