How Can Accountants Help Save You Money On Tax?
If you are wondering whether employing the services of an accountant will be worth it for your business, the following guide will help you to decide by outlining some of the benefits that an expert business accountant can bring.
Accountants can save you time and money by handling the financial aspects of your business while ensuring you remain compliant with HMRC. If a finance professional is handling your accounts, tasks such as bookkeeping, preparing tax returns, payroll, and many other financial processes are likely to be more organised and efficient.
Business accountants are experts in taxes, and may even have a better understanding of the financial side of your industry than you. As well as handling any necessary tax documentation in line with HMRC’s requirements, accountants can use their knowledge and experience to find schemes to help you avoid paying more tax than you need to.
Supporting your business with financial planning
One example of how business accountants can help you save money is by implementing pension planning. Working alongside Human Resources, accountants can support in setting up an appropriate pension scheme that will be compliant with HMRC, benefitting the employees and the business’s tax rate. Read more about how we handled a situation using pension planning here.
Reducing the amount of tax you pay
You may be unaware that your business is eligible for savings or benefits. Business accountants are generally well-read on the industry they choose to work in, so they should be able to offer strategic financial advice depending on the type of business you run, the number of employees you have, and other unique aspects of your industry.
Staying on top of deadlines
If you are preoccupied with other aspects of your business, the complexities of finances and tax can make accounting difficult to stay on top of. Whether it is a missed tax deadline and/or a struggle to remain compliant with HMRC, you could end up with fines or paying more tax than you need to. These are just some of the many reasons businesses hire accountants.
Finding areas to appeal on tax expenditure
If you have sourced transport, insurance or healthcare to your employees, you will be required to pay additional tax. If these have been sourced for disabled or struggling workers, an appeal with HMRC might alleviate additional taxation, and accountants can facilitate this dialogue.
Analysing and preparing tax returns
Accountants can also prepare tax returns. If you have paid too much tax, your accountant can analyse your expenses and the laws surrounding them to assess whether you could claim money back. This is a very important part of business accounting, as reducing unnecessary spending will most likely increase your profits.
Using connections with other accountants and experts
Accountants maintain connections with other accounting or tax professionals, such as the Independent Financial Advisers who aided Sherlock & Co in providing an outside opinion on the pension planning case. In some cases, an unbiased opinion may be necessary to help assess taxation. A trusted accounting firm, such as Sherlock & Co will have beneficial connections and are well-equipped to hold communications with such experts.
Identifying small tax-saving methods
A smaller method of saving tax includes investing in vouchers for employees. They must be considered ‘trivial’ investments to be tax-free and, for this to apply, the vouchers must be: £50 or less, inexchangable for cash, and not have a contract aligned with them. This action should only be taken if the money you are wanting to save tax on is going to be spent anyway, and is great for your employees who might be happy to receive a company-financed bonus.
Advising on the best places to store money
For sole traders (self-employed business owners), storing money in savings accounts such as ISAs means that an amount of your money can be stored tax-free. This amount depends on the type of ISA as, for example, Stocks And Shares ISAs and Cash ISAs have different rules surrounding how much money can be transferred within a tax year. These types of accounts often have an interest rate, meaning your money stored can actually increase with time. ISAs are not available for businesses with more than one employee.
Saving tax on out-of-office activity
Accountants may also be able to advise you on how you can save tax during out-of-office hours. For example, electric cars may be expensive initially, but owners are required to pay much less tax on them compared to petrol and diesel vehicles. Switching to electric may benefit you outside of the office, but investing for your company could also have huge benefits in the long run. See our case study about Tesla cars here for more information on how Sherlock and Co have helped advise on this subject.
Employ an expert business accountant
Saving on tax is a very large part of business for companies of all sizes and from all industries. If you can save on tax, it may improve your profits. Such money could be invested back into the company, or it could boost your personal earnings. To make the most out of such opportunities, employ the services of an expert business accountant.