As a small business owner, managing your finances and maximising tax deductions are crucial to the success of your business.
By taking advantage of all available deductions, you can save money on the taxes you owe and keep more of your hard-earned profits.
To help you navigate the complicated world of tax deductions, we have compiled a list of the top 10 deductions every small business owner should know about …..
1. Home Office Deduction: If you use a portion of your home exclusively for business purposes, you may be eligible to deduct expenses related to your home office. This can include a portion of your rent or mortgage, utilities, and insurance.
2. Vehicle Expenses: If you use your vehicle for business purposes, you can deduct expenses such as petrol, maintenance, and insurance. Keep detailed records of your mileage and expenses to substantiate your deductions.
3. Startup Costs: Don’t forget to deduct startup costs for your business. This can include expenses such as advertising, market research, and legal fees.
4. Equipment and Supplies: You can deduct the cost of equipment and supplies necessary for your business, such as computers, office furniture, and software.
5. Professional Fees: If you hire an accountant or other professionals to help with your business, you can deduct their fees as a business expense.
6. Education and Training: You can deduct the cost of education and training related to your business, such as workshops, seminars, and online courses.
7. Travel Expenses: If you travel for business purposes, you can deduct expenses such as airfare, hotels, and meals. Keep receipts and records of your travel expenses to substantiate your deductions.
8. Income Tax Allowance: Every person has a ‘Personal Allowance’ of £12,570. Any income received within this allowance will be tax-free. ‘Income’ isn’t just what you get from work, it includes pension income, rental income and income from offshore bonds. If you haven’t already used your personal allowance, look to see if there are assets you can withdraw an income from tax-free.
9. Dividend Allowance: Everybody is entitled to receive up to £1,000 per year of dividends tax-free. This is particularly useful if you own shares (outside of an ISA) or are a director of a company. (If you own a company, consider appointing your spouse as a director to make use of their dividend allowance).
10. Capital Gains Tax Allowance: If you make a gain/profit on an investment (or second property), you pay capital gain tax. Everybody has a capital gains tax allowance of £6,000 per year (reducing to £3,000 from 2024/25). You can transfer your assets to your spouse or civil partner tax-free, and they can sell the gain. This is particularly useful if one of you pays a higher rate of tax than the other
By taking advantage of these top 10 tax deductions, you can save money on your taxes and keep more of your hard-earned profits. Make sure to keep detailed records of your expenses and consult with your accountant to ensure you are maximising your deductions while staying compliant with tax laws. With careful planning and proper record-keeping, you can minimise your tax liability and keep your small business thriving.
Garland Accounting are accountants in canvey island and provide a range of accountancy and tax services for businesses and individuals.
Whether you are a new or established business, we are always here to help ….
