As we approach the end of 2024, it’s crucial to ensure your business is prepared for the upcoming tax season. Staying on top of your tax obligations now can save you time, money, and stress in the months ahead. Here are five key tax tips to keep your small business on track as you close out the year and prepare for the future.
1. Keep Accurate and Up-to-Date Financial Records
Maintaining organised and accurate records is the foundation of a smooth tax filing process. Small businesses must ensure they track all income, business-related expenses, and receipts throughout the year. Using professional accounting software or hiring a qualified accountant, such as those at Cutts & Co Accountancy, can help keep your finances in order.
Why it matters: HMRC requires precise financial documentation, and errors can result in costly penalties. Additionally, proper record-keeping ensures you claim all eligible deductions, saving your business money.
2. Maximise Your Allowable Tax Deductions
Many small business owners miss out on valuable tax deductions because they’re unsure what they can claim. Common deductible expenses include:
- Office supplies and equipment
- Business-related travel
- Marketing and advertising expenses
- Professional services such as legal or accounting fees
Understanding which expenses are tax-deductible can significantly lower your tax liability. Unsure what qualifies? The team at Cutts & Co can provide expert advice to ensure you’re taking full advantage of every allowable deduction.
3. Take Advantage of Capital Allowances
If your business has invested in assets such as machinery, vehicles, or computers, you could benefit from capital allowances. These allowances enable you to deduct a portion of the cost of these assets from your taxable profits. The Annual Investment Allowance (AIA) is particularly useful for small businesses in the UK, offering substantial relief.
Tip: Speak to an accountant to ensure you’re making the most of the available capital allowances before the year ends.
4. Understand VAT Obligations
If your business’s turnover exceeds the VAT threshold (currently £85,000 in the UK), you must register for VAT. It’s essential to stay on top of your VAT obligations and maintain accurate VAT records. Even if your turnover is below the threshold, voluntarily registering for VAT can offer financial benefits, especially if you purchase goods from VAT-registered suppliers.
Need help with VAT? Cutts & Co Accountancy can assist with VAT registration and management to keep your business compliant.
5. Plan for Tax Payments in Advance
Don’t wait until the last minute to plan for your tax payments. Set aside a portion of your income regularly throughout the year to cover your tax bill. Many business owners choose to open a separate savings account for this purpose, ensuring they’re prepared when tax deadlines arrive.
Pro Tip: Planning ahead not only reduces stress but also helps avoid late payment penalties from HMRC.
