Do You Want to Save Tax ?

Posted by: on Jul 6, 2012 | No Comments

The press have had a field day over the Prime Ministers personal attack on Jimmy Carr over legally saving tax. You will have to decide for yourself whether you think it is morally wrong or not. You also will have to decide yourself whether the HMRC tax settlements with big companies like Vodafone is morally acceptable or not. Mr Cameron is not shouting too much about that is he ? And he refused to comment on Take That star Gary Barlow’s tax affairs – saying it was a different case. It puts a whole new slant on the phrase ‘Take That’.

So what should small business owners do to legally save tax ? If you start a business from scratch it is often a good idea to to start as a sole trader to prove your business concept and have the flexibility of self employment until you have established your business foundations. When you are confident of the resilience of your business you should consider the tax saving possible through converting to a Limited Company. I usually suggest that sole traders consider incorporation after reaching profits in excess of £30,000 (dependant on your circumstances). Various factors can influence the timing of your incorporation, eg do you use a registered childminder hence qualify for childcare vouchers, or would you benefit from a company pension, etc. Before you decide to go ahead with incorportion you should consider the pro & cons. See my earlier blog re the pro & cons of incorporation.

Have you got a family member who could make a contibution to business, and hence pay them wages and/or give them some company shares. Could you use company resources to develop products or process such that you qualify for research and development tax credits ? This can offer very attractive tax incentives. High end TV and computer game designers can also also benefit from tax breaks introduced in the budget. Make sure you consult with your accountant to benefit from these and other more advanced tax strategies.

Sir Tax Accountants of course support all legal methods of saving tax. We will help business owners in Camberley and surrounding areas review your business processes and marketing strategies to grow your business profits. After all the higher your profits the more opportunities there are for tax savings.