Is taxing season stressing you out? Here’s how to effortlessly manage it
In the UK, one of the most stressful times of the year happens from 31 October to 31 January.
That’s when taxing season occurs, and every company needs to start filing their papers.
Although taxation is a vital economic element and governments are collecting these resources for other social projects, this is a tedious process that takes time and sharpened attention to avoid federal tax liens or wage garnishments.
Failure to pay penalties isn’t that severe if it happens once, for example, but as they pile up, you may be surprised to owe a considerable amount of money in April, at the end of the tax year.
And while others don’t have bad intentions, some of the biggest companies in the world, such as Amazon, Nike and FedEx, are avoiding paying federal tax by using tax loopholes, depreciation and stock options.
As a company, handling taxes can be stressful, but it’s best to manage it well so that you reap only benefits at the end of the tax year.
Here’s how to do it.
One of the biggest mistakes regarding filing your taxes is postponing it.
If you don’t create a particular schedule in which you add the dates provided by the government to file your taxes on time, you might forget about these critical terms and discover, at the end of the tax year, that you need to pay a lot of money (that you might not have).
For example, some of the most important dates your company needs to be aware of include the following:
- On 31 January, there’s usually the deadline for online self-assessment tax returns;
- On 19 April, there’s the deadline for final PAYE submissions;
- 5 October is the deadline for tax returns;
- 30 December is the deadline for submitting an online tax return for owed taxes from pension and wages;
Nowadays, filing the VAT for businesses is done online, which benefits your company as you don’t have to move from one financial institution to another.
Therefore, if you set deadline reminders from time to time, you’ll be able to add all information on time.
Use accounting software
Regardless if you’re a smaller or bigger-in size business, you can invest in accounting software that can help you keep records more easily and efficiently.
The advantages of using accounting software include the following:
- You can automate invoicing, payments and data-importing processes;
- You can generate reports essential for managing your finances;
- You can streamline tax filing in an organised manner;
- You can save time and money as manual tasks are minimised;
However, as everything happens online, you need to be careful with data breaches when filing taxes online, as you’re sharing vital information about your company.
Cybercriminals usually take advantage of businesses that let tax filing on the last day and file fraudulent returns.
According to www.publicinterestlawyers.co.uk, if your company is affected by material damage from a data breach, you can claim compensation.
Learn what’s tax deductible
Business tax deductions are some of the most underrated aspects of the budget. Generally, most business expenses are deductible, such as office rent, salaries or utility costs. However, this depends on the region and the regulations provided by the government.
For example, small businesses can deduct some of the following:
- Organisational costs;
- Inventory (storage, labour costs);
- Insurances (liability coverage, worker’s compensation costs);
- Office Supplies;
- Business travel expenses;
- Contracted labour;
However, some things are not tax deductible.
- Personal expenses;
- Political contributions;
- Commuting expenses;
- Certain gifts;
- Meals and entertainment that are not included in any business trips;
You can save tax with deductions because it reduces the income subject to the highest tax brackets. Some other tax-reducing benefits also include credits, exclusions and shelters. Learn what each can do for your business, and make sure you’re not increasing your budget deficit.
Donate to charities
Donating to charities as a business benefits you greatly.
That’s because your brand is recognised as one implicated in society’s issues and getting closer to your customer.
Still, you’re also expanding your opportunities by collaborating with other organisations and companies.
One of the greatest things about donating to charities is that you can reduce your tax liability.
There are some limits on how much you can donate as a company, which is, most of the time, 25% of your taxable income per year.
You need to thoroughly check the charity you’re donating to because it needs to qualify as a tax-exempt organisation.
Expenses related to volunteering can also be tax deductible donations if they’re showing the volunteer work your company contributed to.
Don’t forget to document your contributions.
For every bank statement or receipt, you must keep copies, especially if you donate more than £200 or want to deduct at least £500 worth of non-cash donations.
Set aside cash
Finally, one of the best advice regarding tax management is to set aside some cash for payroll taxes.
For example, some taxes are necessary to consider, such as social security tax, Medicare tax and federal income tax.
It would be best to get a payroll tool to assist you in handling these expenses so that you stay compliant.
To properly set aside money, you can:
- Get clear on your tax obligations, such as income tax, but sales tax or franchise tax might also be needed;
- Save 30% of your business income as a rule of thumb to cover your federal taxes;
- Choose a saving method, such as the monthly and yearly method;
Don’t worry if you pay too much because you can regain those assets as a tax refund and invest it where needed.
Your company will flourish if you avoid penalisations and file out your taxes as long as you stay compliant.
Taxing season is one of the most challenging parts of the year.
As some businesses avoid paying their taxes, regulations are stricter, and the rest must comply.
However, regardless of what laws and rules change, it’s best to fill out your taxes and time. -->
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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