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Year-end tax tips 2018

With the end of the year nearly upon us, now is a good time to review your business finances. Doing so will help you to assess your firm’s profitability, identify areas of potential weakness and make sure that you are heading in the right direction for the future.

Part of that process should be reviewing your tax situation. One of the biggest expenses entrepreneurs face is their tax bill. For every pound you get paid, after allowances, you will have to hand a percentage of it over to the tax authorities. This means keeping on top of your taxes is critical, and the end of the year is a particularly good to do the following tax-related activities:

Catch up on your accounting tasks

If the busy Christmas period has left you behind on accountancy tasks such as entering expenses receipts onto your system, now is the time to catch up. Doing so will ensure that you do not lose any of those precious receipts. The longer they sit around, the bigger the chance that some of them will go missing or get thrown away by mistake. If that happens, you will not be able to use those particular expenses to offset some of your tax liability.

Determine if you can reduce your tax liability

If you are running a limited company or another type of corporation, now could be a good time to sit down and work out how much tax you are likely to owe. This will help you to identify if you should perhaps be reinvesting some of your profits to reduce your tax liability at year end. However, whether you should be doing this now or at some point in the coming months depends on when you set up your business. If you are near the start of your company’s financial tax year, this exercise should be left until later in the year.

Look at, and prepare for, upcoming changes to tax legislation

Now is a particularly good time to make sure that you understand and are prepared for upcoming taxation changes. The more prepared you are, the easier it will be for you to manage those changes.

For example, in 2019, the first phase of the Making Tax Digital regime is due to be rolled out. From April, all VAT details and returns will have to be kept and filed digitally. Everyone who meets the VAT threshold, or is likely to do so between now and then, needs to be sure that they are ready for this change.

Look for tax savings

If you have not already done so, it is wise to review the upcoming changes to see if you could in fact save yourself from paying more tax. Your accountant will be able to help you with this very important task.

Hopefully, you can see the wisdom of using the lull directly after Christmas wisely to review your finances and identify the way forward for your business in 2019. Your accountant will be able to help you with many of the above tasks – all you need to do is to ask.

Posted by Peter
December 27, 2018

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