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How To Minimise Your Tax Liability As A Business Owner

Jul 14, 2021

We know that tax is a significant variable facing business owners, which is why we invest heavily in experienced, highly qualified tax advisors. Our team works with a wide variety of clients in businesses across various industry sectors to meet tax compliance obligations and provide beneficial tax strategies to all types of business owners. In today's blog, we wanted to look at some simple methods for lowering your tax liability as a business owner.  

Taxes, like any other expense, can be controlled and lowered with our proper planning and guidance. Cashflow and money will always play a significant part in the potential success for any business so ensuring proper compliance and setup will be crucial for you. The Revenue Commissioners will always get their percentage from your personal and company wealth, but, here are some methods to help you minimise your business's tax obligations and reduce your tax liability as a business owner.

Methods to reduce tax liabilities as a business owner

  • Maintain systematic record 

While this may seem self-evident, many companies lose out on valid tax deductions or face unjustified add-backs or penalties as their accounting records are insufficient to identify and verify all of the expenditures they are allowed to claim.

  • Tax credit

A tax credit is an instrument that lowers your tax liabilities by decreasing the amount of tax you pay over a financial year. Some of these are provided automatically, while others must be claimed. Any credits that aren't claimed can't be refunded or carried over to the next tax year. By contacting us or by doing some research on your own, you can get to know what tax-deductible expenditures are suitable for your business.

  • Finance capital expenses for tax exemptions

If you buy equipment with cash or a loan, you may receive a 12.5% tax reduction across six and a half years. However, it may be more cost-effective to purchase equipment on a lease and claim tax benefits throughout the lease, usually three years.

  • Engage your spouse or any other family member

Employing spouses or other family members can also be tax beneficial if you can establish and explain their role in the business.

  • Change your company's accounting reference date

In some instances, altering your company's accounting reference date can be beneficial if your business is seasonal or if your profit measures are rising or falling.

  • Preliminary tax

Choose to pay your preliminary tax based on current year projections if your income is expected to decrease.

  • Travel and subsistence 

Revenue allows for the tax-free payment of mileage and subsistence as long as the proper paperwork is held.

  • Consider turning into a Limited Company

There are other factors to consider when starting a business, but if you're making more money than you need to cover your costs, it may be worth setting up a company to benefit from further tax reductions.

  • Generate management accounts before the end of the year 

Calculate your possible tax liability before the end of the year to allow yourself enough time to prepare and manage your tax payment.   The methods mentioned above will given you an idea of how you can minimise your tax liability as a business owner. However, as is often the case with financial planning, we look at every business owner individually and set out a plan that is customised and fitted for them. For expert assistance in maintaining your financial records, digital accounting, beneficial tax strategies, auditing, and more intended to profit your business most productively, please reach out.

Do you have any questions?
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