All small businesses need to make sure that they are as tax-efficient as possible. Although every business is different, they still need to consider the following.

• Make sure they are using the most efficient trading format. For some businesses this will be as a limited company, and for others it could be as a sole trader or partnership.
  Bear in mind that big changes are expected to be announced in the 2004 Budget that will affect the tax treatment of profits taken from companies by their owners.
• When starting a business, make sure that you choose your year end and VAT quarters carefully so that any tax payments fall due at the best time for the business.
• Set up an efficient tax policy for paying profits back to the owners; for example, a mix of dividends, salaries and benefits for limited companies.
• Set up a policy and budget to invest in machinery, computers and so on, whichtakes full advantage of any available tax allowances. Until 31 March 2004, any small business investing in information and communications technology (ICT) can write off the full cost for tax purposes in the year of purchase.
• At least once a year, review the VAT and employment tax rules that affect your business to make sure that you are applying the correct rules.
• If you are planning to sell the business, prepare plans to minimise any capital gains tax due on that sale.
• Keep your accountant informed of any big changes that you are making to the business so that they can advise you on any tax implications beforehand.

Appletons will be delighted to help you make sure that your business takes full advantage of all available tax savings.

Established Businesses - Tax Planning

Failure to minimise your business taxes can cost you money -– it can also prevent your business from realising its full potential.

Although you should never let tax breaks persuade you to make a poor business or investment decision, proper tax planning in its place can substantially improve your bottom line.

What does business tax planning involve?

The areas you will need to consider include:

* The ‘structure’ of your business
* The available tax reliefs and capital allowances
* Employing family members
* Business year end planning
* The tax-efficient exit or sale of your business

Tax flow planning

When you consider business taxes it is almost as important to plan for payment as it is to plan for reduction.

Many businesses face problems every year when an unexpected tax bill falls due.

For the self-employed, income tax and national insurance contributions (NICs) are payable at six-monthly intervals – 31 January and 31 July each year – with a system of surcharges and interest if payment is not made on time.

Limited companies must pay corporation tax nine months after the end of each accounting period. All businesses must also plan to cover their regular VAT and PAYE liabilities.

Every business has its own, unique circumstances. For careful analysis of your situation and one-to-one advice – call Appletons now or click here for a PDF with more advice.