Running a business can be a series of ups and downs so planning should always be prioritised especially when the end of the financial year is looming. Being a fully incorporated company will help you protect your company’s assets by means of smart planning, which includes reducing your corporation tax liability.
This strategy will not only limit your tax liability and save you money but can also provide you with many tax advantages such as fewer tax audits and more tax deductions. Keep in mind to consult with your accountant first to avoid getting your corporation tax incorrect.
Here are some simple ways to reduce your tax liability:
Make smart purchases and investments
The timing of your investment in new equipment or services for your business can affect your tax liability for the current or following year. For example, if you’re approaching the end of the year and planning on purchasing equipment, make sure that you have enough time to get the tax deduction in the current tax year.
Know which deductions you can legally make
Making yourself aware of potential deductions can help you reduce your taxes and avoid tax audits. It is essential to conduct a thorough research about these legal tax deductions which you can inherently use to your advantage.
Understand what is and isn’t taxable
It is important to understand that not all cash inflow is taxable income and all cash outflow are deductions. What determines deductibility is the nature of the cash inflow or outflow.
Albert Goodman offers bespoke tax solutions to suit your business tax needs. We are one of the largest accountancy and business service firms in the South West that provides full-service accountancy, tax, financial planning and business advice. Click here to request a return call.