Paying tax is something that all businesses have to do, ensuring that you pay the right amount is crucial as overpayment can put some businesses into financially precarious situations.
Understanding what to do in order to ensure you pay the right amount of tax, and knowing what steps to take if you think you might have paid too much are key to avoiding potential financial difficulties within your business.
Ensuring you pay the right amount
Businesses pay tax based on their taxable income or profits. There are a number of ways a business can ensure they pay the right amount, including:
- Tax relief – for smaller businesses it is important to be aware of the different aspects of tax relief which are available. These can vary depending on your businesses size, sector and location.
- Tax deductibles – much like with tax relief there are a range of tax deductible items which businesses can list in order to lessen their tax bill. For example, the self-employed, particularly those who work from home, being able to claim the energy costs associated with work as tax deductible.
One way to help ensure you don’t over pay on your taxes is to enlist the help of a qualified accountant.
An accountant, while potentially costly, can help you fill out any paperwork, help with tax self-assessment and ensure your tax bill is calculated as accurately as possible.
Ignoring the potential to reduce the amount you pay in tax can leave you paying more than you need to. For smaller businesses, this can lead to a variety of problems, hindering cash flow, slowing growth and preventing you from investing in your own business as much as you’d like.
What if you pay too much in tax?
If you suspect that you might have paid too much in tax, either by reviewing your financial information for the year and discovering something you’ve overlooked, or because your tax bill seems higher than other years for example, it is important that you take steps to at least double check you haven’t left your business out of pocket.
Seeking advice from a tax expert such as Brian Alfred can help you to work out if you might qualify for a tax rebate and help you to make a claim to HMRC.
Working with a tax advisor can help you work out what you may have overlooked when filing your taxes and point you in the right direction to recoup some of what you paid in tax.
While the amount will vary on a case by case basis, smaller businesses and sole traders are likely to benefit from the extra money, especially if it can be reinvested back into their business, helping to offer improved services, promote itself or fund future expansion.
Giving yourself time to focus and ensure that you fill in a tax return correctly and in good time to avoid rushing and potentially overlooking possible deductions or tax relief options open to you, can help your business to save money and avoid overpaying on your tax bills.