Your small business

Have you spoken to your accountant about this issue?

1

Are you sure that you are taking money out of your business in the most tax-efficient way?

Tip: If your business is a limited company it often makes sense to take out your money out by a combination of salary, benefits in kind and dividends.

Yes

No

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2

Are you paying your spouse a tax efficient salary?

Tip: The salary must be sensible and reflect the work done.

This can be achieved by writing a contract of employment for each employee

Yes

No

N/A

3

Have you made the most of your opportunities to save tax by investing in a personal pension?

Tip: Pension contributions are tax deductible - which means it may cost you as little as 60p to invest £1 in a pension. If you don't provide for your retirement, who else will?

Pensions instead of salary means a saving of 12.20% employers national insurance and this can (also) be contracted back into the pension pot.

Yes

No

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4

Have you reviewed your pension arrangements?

Tip: The 1997 Budget cut pension fund income by 20% by not allowing pension companies to reclaim the tax credit on dividends.

This means a much smaller pension unless you start to increase your contributions. So the sooner you start, the better.

Yes

No

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5

If you are a sole trader, have you considered taking your spouse into partnership?

Yes

No

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6

If you are already in a partnership, have you considered the tax (or other) benefits from converting partnership loans and/or surpluses into personal loans - or vice versa?

Yes

No

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7

Have you considered the legitimate ways to increase or decrease your business profits so that your allowances and tax rates are used as efficiently as possible?

Tip: There are severe penalities for artificial transactions, but there are still some practical and legitimate steps you can take.

Yes

No

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8

If you are about to invest in a new car, computer or any other business equipment, have you considered the best time to buy them and the best way to pay for them?

Tip: You will get tax relief a lot quicker if you make the investment shortly before rather than shortly after your business year-end.

Yes

No

N/A

9

If your business has made losses in the past, have you made sure that those lossed are being used to reduce your current tax bills by as much as possible?

Yes

No

N/A

10  

If on the other hand, your sole reader or partnership business is making profits, have you considered whether you could save tax by transferring the business to a limited company?

Yes

No

N/A

11

If you run a very profitable limited company, have you done everything possible to make sure that your profits are taxed at 21% only instead of 24.50%?

Tip:

Yes

No

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12

If you run a one man band limited company, have you taken appropriate steps to ensure that the IR35 rules won't cost you a fortune in additional tax?

Yes

No

N/A

13

If you run a one-man band business (not a limited company), have you made sure that there is absolutely no possibility of the the taxman charging you much more money by treating you as being employed by one or more of your best customers?

Tip: You may firmly believe you are self employed. But the taxman may think differently. And it could cost you a lot of money. So we strongly recommend you take some good advice.

Yes

No

N/A

15

Have you considered recently (in the last 12 months) whether your business would be better off trading as a sole trader, partnership or limited company?

Tip: The many changes announced in the last few Budgets have moved the goalposts once again. For many businesses the scales may have tipped in favour of becoming a company. While for a few it may now be better to go back to being a sole trader or parmership.

Yes

No

N/A

16

Have you planned ahead and taken action to minimise your tax bills when you eventually come to sell the business?

Tip: Do you really want the taxman to take up to 40% of everything your business is worth? The amounts involved could be huge. But with proper planning you should be able to keep much more of your money in your pocket... and not in the taxman‘s.

Yes

No

N/A

17

If your business invests in Research and Development (‘R&D’), have you planned how to make the most of the 150% tax break announced in the March 2000 Budget?

Tip: From 1 April 2000 companies spending more than £25,000 a year on R&D will get tax relief on 150% of their R&D spend. But there are restrictions. So, to make the most of one of the most generous tax breaks in the UK system, you may need professional help.

Yes

No

N/A

18

Have you considered making easier use of business gifts as a marketing tool now that the March 2001 Budget has made this cheaper?

Tip: In the past the cost of business gift was only tax deductible for you if they (a) contained a conspicuous advert for your business, and (b) were NOT food, drink, tobacco or tokens or vouchers exchangeable for goods, and (c) they did not amount to more than £10 per person a year. The March 2001 Budget increased the limit in (c) to £50 — which, for many businesses, makes business gifts worth looking at again.

Yes

No

N/A

19

If you are not already registered for VAT, do you have a system for making sure that you are still entitled to stay non VAT registered?

Tip: From April 2002, if your sales in the previous 12 months are more than £68000:00 then you MUST register for VAT immediately. So our advice is to set up a system for monitoring your 12 monthly cumulative sales every single month.

Yes

No

N/A

20

If your sales are less than £1.35 million a year, are you making VAT much easier and cheaper for your business by making the most of the annual accolniung and cash accounting schemes?

Tip: With sales up to £1.35 million you can take advantage of them. Many businesses find that annual VAT accounting saves them a lot of time, and cash accounting dramatically improves their cashflow. So they are both well worth exploring.

Yes

No

N/A

21

If your sales (excluding VAT) are less than £150,000 have you considered switching to the flat rate VAT accounting scheme?

Tip: Under the flat rate VAT scheme, smaller businesses will not need to keep full records of invoices received and issued. Instead they will be allowed to pay VAT as a flat rate percentage of their sales.
Not only could this new scheme be simpler to administer, but it could also result in you paying less VAT.

tax buster

David Barry                 0208252 018/07877671423

 David Barry    Accountants and tax advisers         020 8252 7018/07877671423

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No

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