When tax hikes and budget cuts loom using Making Tax Digital, there is one area of government policy that remains stable: taxes for small businesses. Unfortunately, however, it may take a long time for changes to trickle down to consumers. That’s why a small business owner needs to take an active role in tax planning and filing. In the meantime, there are several valuable resources available to help business owners keep track of their tax obligations, and there are even tax relief programs that small business owners can apply for if they meet specific criteria. Here’s a quick guide to tax planning for small businesses in the UK.
Keep Track of Your Tax Obligations
There are plenty of free online resources to help small business owners keep track of their tax obligations. Just so you know, Making Tax Digital does not stop at VAT – corporation tax and income tax are still to come, but that’s another can of worms we’ve been dealing with for quite some time. If your company is VAT registered, its taxable earnings are likely to be lower than those of any other UK company, so you’ll need to pay out more on your taxes.
Hold Your Company Formation Manual
The first step to making tax digital copies is to get a hold of your Company Formation Manual. Most new businesses file their tax returns using the UK Companies House system. However, businesses that have been in operation for a while may choose to file their accounts, ledgers, and other documents by accessing a microSD card via a certified tax practitioner (CMP). This is particularly helpful for small businesses wary about sharing their details online.
Start Making Tax Digital Copies Using a Spreadsheet
Once you have these all filed, it’s time to start making tax digital copies using a spreadsheet (Excel or one of the many excellent free accounting software programs). These tax return spreadsheets should include information on the businesses’ assets, liabilities, revenues, expenses, etc. For example, if you have employees, it’s advisable to keep accurate records of their salaries and benefits. If the business has a vending machine, descriptions of the money it brings in and the amount owed to it on past-due invoices will also be helpful. And don’t forget to make a copy of all your VAT payments and other bills and keep them handy so you can reference them when tax season comes around again.
E-Based VAT Solution
Some small businesses might prefer to use an e-based VAT solution. This is particularly useful for companies not resident in the UK and wants to make their payments electronically. With an e-commerce VAT solution, businesses can now file their tax system works electronically using the secure online portal. This saves time and money for businesses, but it reduces the risk of human error.
To Understand Cash Flow
Most small and medium-sized businesses need MTD services. They will require financial management and accounting skills to understand their cash flow, budgeting, finance policies, and debt collection. They will also need to develop and implement cost control, operational risk management, and financial performance strategies. Most small and medium-sized businesses also have a marketing and administrative staff. These employees will need to know how to manage company accounts.
Keep up With the Latest Tax Laws
Many small UK businesses, even those just starting, might not realize how important it is to keep up with the latest tax laws. To stay compliant with UK tax law and file their yearly returns, it is vital to know the new regulations regularly. One of the best ways to get familiar with UK tax rules is by downloading a helpful UK tax tool from the Internet. UK tax software is straightforward to use and is available in both Microsoft Word and Apple iWork Pages formats, and is capable of being shared with other members of your company so they can learn new rules and regulations.
Help You Maximize Your Profits and Minimize Any Unnecessary Expenses
Every company needs to understand how MTD works and what is involved when reclaiming VAT. Understanding how the UK MTD system treats different transactions will help you maximize your profits and minimize any unnecessary expenses. It is possible to make huge savings through VAT settlement and the subsequent reduction of your business’ tax burden. Understanding the ins and outs of how the system works will ensure that you never fall into the trap of paying too much out of your profit to avoid paying too much in the form of VAT.
Finance Operations
Finance is one of the areas that require solid professional skills. The Finance operations management is also needed at times because it involves international procurement, sale, and circulation of goods and services. Accounts and finance training prepares you to take on the role of finance manager and teaches you how to analyze financial data, budgeting, financial documentation and accounts interpretation. Some of the subjects you may study include accountancy training, finance theory, international management, and auditing.
When Businesses File Their Tax Returns
When businesses file their tax returns for the April calendar, they must inform the HM Revenue and Customs Department, commonly known as HMRC, of any changes made to their accounts. These include new sales figures, outlets, additions/deletions to the same shop, and more. This is because these changes will impact how much the businesses owe to the government, and it will then be up to the authorities to figure out how to pay it.
Conclusion
However, some UK tax laws do not allow companies to withhold taxes or give them to the government directly. For these kinds of situations, businesses must instead file their taxes using electronic means, such as by using a software program to input their UK tax information and then send that data electronically to their accountants. Using electronic means to file your taxes is fast, convenient, and highly secure. Now that you are more familiar with the basics of the tax system in the UK start making your vat return data available online today!
