Starting out: Tax tips for the new business
If you've never been self-employed before, today's article might be something of a wake-up call for you. After all, for years you have been used to your employer doing the legwork and filing your taxes for you.
Then, suddenly, everything is on you. Unfortunately, this is the grim reality of tax and small businesses and far too many of them make grave mistakes in their opening years.
The purpose of today is to tell you some actionable advice that should hopefully help you save time, money and heartache during those first few years.
Firstly, make sure you pay it
No, we’re by no means suggesting that you’re attempting to go above the law, but a lot of new business owners genuinely forget about their tax requirements.
As we have already spoken about, for a long time this sat with their employer and they never had to give it a second thought. This is the first time in their life they have become responsible for these obligations, and you would be surprised at just how many people completely forget. The last thing you need is to be met by a gigantic bill at the end of the year, which you haven’t factored in whilst pricing any of your goods or services.
The power of organization
Sure, this next point feels like an “easier said than done” moment. In other words, before you get into the hustle and bustle of a new business, it feels a very easy thing to declare that you should become organized.
Well, this is what should happen. Every time you spend money, keep a receipt. Then, keep all invoices filed accordingly. These two steps are ridiculously simple, but they make the world of difference at the end of the year when you are frantically trying to piece together your accounts.
This is just the tip of the iceberg as well. For example, you should also have a separate business account, but the list could well and truly go on.
Always remember the deductibles
This isn't about completing a SA100 form, as there are plenty of resources to help you with that. Instead, it's just about remembering your deductibles.
Like a lot of the topics we have spoken about, the number of people who forget this is incredible, but it can make a huge difference to your tax bill. Some deductibles might not sound obvious, but even if you have a home office you are entitled to all sorts which can really help you out when you file your accounts.
Pay yourself as efficiently as possible
This is perhaps the most interesting point. You need a salary, but this is naturally paid much differently than it ever has before.
The technique here really is going to depend on where in the world you are based and you should approach a professional for concrete advice. However, let's just say that some methods are more efficient than others. As an example, a lot of self-employed people will use a company car as a method of paying themselves. Sure, it does come with some tax obligations, but it's all about calculating the best way to tackle these issues head-on.