No company wants to get into trouble with the taxman, and yet many businesses aren’t sure exactly how to manage their taxes effectively. Whether you’re a small start-up or an established business, it’s essential to understand the different taxes that may be applicable to your company and develop a payment plan. This article will provide an overview of how companies can manage their taxes effectively in order to avoid future problems.
Understand the Different Types of Taxes
The UK has a wide range of taxes that your company may be liable to pay, so it’s important to understand what they are and how they’re calculated. These include Corporation Tax, Value Added Tax (VAT), employee Income Tax and National Insurance Contributions (NICs). Each tax has its own set of rules for calculation and payment, so make sure you are familiar with them before taking action.
Register With HM Revenue & Customs
All companies must register with HMRC to declare their income and pay applicable taxes. You can do this either online or over the phone, depending on the size of your business. HMRC will also provide guidance on how to calculate different types of taxes and inform you of any deadlines or other requirements.
Maintain Accurate Records
To ensure that your company is meeting its tax obligations, keeping accurate records of all income and expenses is essential. This includes invoices, contracts, receipts and any documents related to transactions with customers or suppliers. These should be kept securely for at least six years in case you need to refer back to them.
Create a payment plan
Once you’ve worked out how much tax your company needs to pay, it’s important to create a payment plan so that you can meet the deadlines set by HMRC without incurring late penalties. Depending on the size of your business, this may be done by setting up a direct debit or regular payment system.
Make use of Tax Reliefs
The UK government offers businesses a range of tax reliefs to help them manage their taxes more effectively. These include reliefs on capital investments, R&D Tax Credits, and employer’s NICs for certain types of employees. Check with HMRC for details about the various relief options available to your company.
Seek professional advice
Tax laws can be complex, and it’s essential to make sure you are following all the relevant rules and regulations. Consider seeking professional advice from an accountant or other financial professional if you’re unsure how to handle your taxes properly.
Taxes can be a complex and intimidating area for businesses to manage, but understanding the different types of taxes and registering with HMRC are reasonable first steps. Maintaining accurate records, creating a payment plan and taking advantage of available tax reliefs will also help you to stay on top of your company’s tax obligations. Finally, consider seeking professional advice if you’re unsure about any aspect of managing your taxes effectively. By following these tips, you can ensure that your business is compliant with the law and avoid issues with HMRC in the future.