BusinessHABWhen business taxes due: You may have heard that taxes are bad, but the truth is that taxes are important. Taxes help fund necessary services and infrastructure and ensure everyone pays their fair share. You’re probably thinking this doesn’t sound good…but it really is! While taxes can be an inconvenience, they also offer many benefits. Tax breaks can save you money while reducing your tax liability, which means you may end up with more money in your pocket than if you didn’t take any tax breaks.
As a small business owner or blogger, you face unique challenges when it comes to taxes. If you own a small business, self-employment taxes may feel like a burden rather than a benefit. However, knowing the ins and outs of taxes as a small business owner or blogger can help you save money and put more of your earnings into your own pocket. Keep reading for some helpful tips about taxes for small businesses and bloggers.
10 Business Tax Tips for Small Businesses and Bloggers
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As a small business or blogger, you might find taxes an overwhelming and stressful topic. But there is no need to panic — paying tax as a self-employed individual isn’t that complicated once you understand the ins and outs of it. With the right know-how, keeping up with your tax obligations can actually be straightforward and stress-free. The tips included in this blog will help you stay on top of your tax responsibilities as a small business owner or blogger. Let’s face it – nobody likes paying taxes – especially as a self-employed person with additional expenses like COAs, cars, computers, office expenses etc., but it’s something that you must do to keep things fair for everyone else. This blog will give you some insight into how taxes work and what steps you should take to manage your tax obligations effectively as an independent contractor or freelancer.
What you need to know about taxes as a business owner
When you’re running a business, you have a few different tax obligations to keep in mind at all times. The first and foremost is filing your annual tax return. This is the only way that you can claim back the money you’ve paid into taxes over the course of the year. However, this is only available to individuals who have been working as a self-employed person. This means that if you work as an employee, you will not be able to claim back the taxes that you’ve paid. You also need to keep track of your deductions throughout the year. Self-employed individuals can deduct a variety of different things from their taxes, depending on the type of work that they do.
Record keeping and why it’s important
Keeping records of all of your business expenses, no matter how small, will help you to reduce your tax bill. In fact, if you keep track of all of your expenses, you could end up owing nothing at the end of the year. This is especially true if you are using a cash-based accounting system. A cash-based accounting system means that you only record your business expenses once you’ve actually paid them. Keeping track of your expenses will help you to claim back all of the money that you’ve spent on your business. This will help to reduce the amount of money that you owe in taxes at the end of the year.
Tax deductions and what they are
There are a few different types of deductions that you can take if you work as a self-employed individual. Depending on the type of work that you do, you could be eligible for deductions for things like travel expenses, car expenses, computer expenses, health and safety equipment, and more. Keep track of all of your expenses, regardless of how small they are, and you could end up with a significant reduction in your taxes. For example, if you drive to one or more clients’ locations during the week, you can deduct a certain amount from your taxes. If you use your car at least 50% of the time for work, you can deduct the entire cost of the car from your taxes. You can even deduct any parking tickets or fines that you receive while working.
When to pay HMRC and when to pay yourself
A lot of people make the mistake of paying themselves before they pay their taxes. This can end up causing you a lot of problems. It’s best to pay your taxes first, and then pay yourself what you’ve earned in the form of a salary. This way, you’ll avoid any issues with HMRC. If you are paid in a normal salary or commission, you should pay your taxes every month. If your tax liability is less than £100, you can use the self-assessment online service to pay it. If it’s more than £100, you can pay through the HMRC online service. If you are paid irregularly, you will have to request a tax assessment from HMRC. They will tell you how much you owe in taxes, and you’ll have to pay the full amount in one go.
Taxes you must pay as a self-employed person
As a self-employed person, you are responsible for paying not only income tax, but you’ll also have to pay National Insurance (NI). The NI amount varies depending on what type of work you do. The rates for NI are different for each type of work: employees, the self-employed, contractors, and directors. If you earn more than £45,000 a year, you’ll have to pay income tax, NI, and the rates of both of these are increasing every year.
Taxes that you might have to pay as a business owner
If you are running a business, you might also have to pay certain taxes at the end of the year. This will depend on the type of business that you have and where you’re based. Some of the most common taxes that small business owners have to pay are VAT, business rates, corporation tax, and income tax. VAT is a consumption tax that you have to pay on goods and services (e.g. supplies, repairs, property management) that you buy for your business. Get in touch with your local government to find out more about the rates and thresholds for your business. Business rates are a tax on commercial properties, and the rates you pay will depend on the value of the property. Corporation tax is a tax that applies to companies. The rate of corporation tax depends on the type of business that you have. Income tax is an annual tax that all individuals have to pay, including self-employed people and small business owners.
Final words
Taxes can be an intimidating topic, but they don’t have to be. By keeping track of your expenses, keeping a record of your income, and knowing which deductions you can take, you can reduce your tax bill significantly. Make sure to take advantage of all of the deductions that you can, and you’ll be on your way to enjoying a lower tax bill at the end of the year.
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