2020’s Top 10 Tax Savings Tips for Small Business & SME’s
The tax world is increasingly complex and fluid. However, getting your tax position right can quite literally pay dividends.
Whisper it, but tax is not the most important thing in the world.
Tax should never be the sole driving factor in making any commercial decision. However, once you have decided what you are doing from a commercial and personal standpoint you should always check out the tax position.
A great investment can be reduced to an average one if the tax position is not optimised.
An Introduction to 202o’s Top 10 Tax Savings Tips Ideal for Small Business
Tax Tip 1. Get Your Business Structure Right
The way you set up your business will have significant implications on the amount of tax you pay.
Whilst many small businesses still trade as sole traders or partnerships, given falling corporation tax rates, the majority of business owners would likely pay less tax and NI if they incorporated.
This is especially true where profits are reinvested back in to the business.
On the other hand, where a business owner expects to make trading losses in the early days, he might be in a position to offset those losses against his or her personal income for tax purposes. This might be the case where he or she operates as a sole trader, partnership or member of an LLP.
There is no one size fits all approach.
Equally your business structure should have the ability to flex as your business grows and changes.
For example, there may come a time when a small group structure will facilitate the redeployment of funds between different entities in a tax efficient manner.
Again, the tax position will need to be squared with the legal, commercial and regulatory ramifications of a particular structure.