1. Your greatest assets are your employees
Your greatest assets are your employees. They’re also your greatest cost.
You also pay 13.8% National Insurance on everything you pay them over the NI threshold and your employees pay tax of 20% and National Insurance of 12%. To save costs you could do either of two things.
Try to employ part time workers and if you pay them less £150 a week they don’t pay any tax or N.Insurance and you don’t pay any Employers National Insurance.
The second thing you can do is to subcontract your work to people who are themselves Self Employed but be careful with this as HMRC might argue that the person is not really self-employed.
2. Claim all your expenses
Claim all your expenses.
Bills not received, working from home expenses and items you bring into the business when you first set up.
There are a few ways of looking at this and it needs good tax planning.
If you’re a Sole Trader and your turnover is less than VAT threshold you can simply claim 45p for every mile.
If you’re a limited company you can usually claim the cost of the car (but probably only 8% per year) and then you will be taxed on your private element.
The tax will depend on your C02 emissions so the lower the emission figure the better.
4. Purchasing any capital items
If you’re thinking of purchasing any capital items (other than cars) you’re entitled to 100% tax relief.
Even if you buy these assets on the very last day of your financial year.
If you’re a Sole Trader you could save 29% of your Tax bill and even a limited company will save 20%. Reduce tax now.
5. Integrate your accounting system
Make sure everyone comes together – Payroll, VAT and Balance Sheet.
A good accounting system means you should be able to check how your doing – comparison to budgets/last year at any time of the month or year.