Taxes! There’s no avoiding them but, there are ways to reduce the amount you have to pay so that your business is more profitable. All it takes is some preparation, planning, and the advice of a good tax specialist.

One of the first things you need to do is talk to your accountant about all the legal strategies available for minimizing your tax bill.

Claiming expenses

This is the best way to reduce the amount of tax you’ll have to pay. But it means being organized and efficient with all your records. You can’t claim something as an expense if you don’t have

Some things to keep in mind are:

• Keep all receipts. It’s a good idea to use an app like Hubdoc to keep track of all your receipts, meaning you’ll never lose a paper receipt.
• Know what you can and can’t claim.
• Use accountancy software like Xero, which uses a bank feed so you can be sure every bank transaction is captured.

Set up a work area at home

Even if your actual business is located somewhere else, it’s a good idea to set up a space in your house and use it for business purposes when you can. As a small business owner, the chances are pretty high that you will end up doing some work from home, so you may as well take advantage of being able to claim a portion of your expenses related to business within your home.

Talk to your accountant about how to go about setting up a home office that meets all the conditions necessary to claim expenses.

The importance of good bookkeeping

Keeping good records is a lot easier these days, with many accounting software solutions available. It’s a good idea to talk to your accountant about which one will fit your business best, and which is compatible with their own systems.

And it’s not just to help you minimize your tax bill either. If you ever have to face an audit, poor record keeping will make this process more stressful than it has to be. And while keeping excellent records with a great software solution won’t help you avoid an audit, it could help make the audit less painful. Being an organized small business owner also means, filing taxes on time to avoid paying penalties and interest.

Summary

Reducing the amount of tax you have to pay is down to good habits, good records and forward thinking. It literally pays to be as organized as possible, because it means you’re better placed to take advantage of all the legitimate ways you can minimize your tax bill.

All of this planning should be done in conjunction with your accountant. They’ll help you get organized and will assist in keeping your business on track so that you’re paying only what you absolutely have to and are getting the maximum benefits from what tax advantages are available.