Taxes are for everyone, small and large businesses alike. As a business owner, understanding tax compliance can help you ensure that your business is following the tax laws. When it comes to the basics of tax compliance, you will mostly deal with filing tax returns on time, paying taxes owed, and keeping proper records.
Understanding tax compliance is especially important for small businesses. As a small business, you need to be aware of the exact compliance requirements that apply to you. By staying on top of your taxes, you can ensure you avoid any financial penalties and reduce the risk of errors in financial reporting.
This is why specialist accountants are so crucial.
At Acumenica, we are a team of highly experienced number-crunching wizards who provide businesses like yours with guidance on tax regulations to ensure that your tax returns are filed accurately and on time. With our expertise, we also identify tax deductions and credits that your business may be eligible for, all while keeping accurate financial records.
In this blog, we will explore the different types of taxes for small businesses.
3 Common Types of Taxes for Small Businesses
1. Corporation Tax
Corporation tax is the tax applied on the total profits earned by limited companies, partnerships and other types of businesses. In the UK, small businesses are eligible for a corporation tax rate of 19%. The rate of Corporation Tax has already increased from 1st April to 25% with a marginal relief for profit between £50k and £250K. You must calculate your total profits and file your corporation tax return on time, so you can avoid financial penalties and interest charges.
However, the good news is that there are certain tax relief and exemptions. For example, some small businesses can apply for research and development tax relief to reduce their corporation tax liability. Alternatively, you may also be eligible for the small profit rate at 19% and the certain value being £50k Capital Gains Tax.
As your accountants, Acumenica can not only make sure that your corporation tax returns are filed on time but can also help you save some of your profit by applying for the right tax relief. Contact us now!
2. VAT
VAT is essentially the tax applied on the value of products and services at each stage of production or distribution. When it comes to the UK, your businesses will have to register for VAT if your turnover goes beyond £85,000 in any 12-rolling month period.
If your business is registered for VAT, you will likely be charging VAT on your sales and collect it for HMRC. You can also reclaim the VAT you have paid on certain business expenses, thus reducing your overall VAT liability. However, you will need to also send regular VAT returns, which can be complicated.
As your business accountants, we are here to save the headache. We will work on the nitty-gritty of your VAT compliance, so you can focus on running the business. We will also find out if you are eligible for certain VAT schemes, such as the Flat Rate Scheme or Annual Accounting Scheme, which can simplify the process for you.
3. Capital Gains Tax
Capital gains tax refers to the tax on profit made by selling an asset that has increased in value. For example, if you sell property, equipment or shares, you will have to pay the tax on the total profit made on that sale. In the UK, individuals are subject to capital gains tax on any gains made over their annual tax-free allowance. If the capital gains go beyond this allowance, the tax rate may depend on your individual income tax and can range from 10% to 28%.
However, as a small business, you can benefit from certain tax relief and exemptions. For example, you may be able to claim Business Asset Disposal Relief (BADR), which reduces your tax rate to 10% on qualifying business disposals.
At Acumenica, we can look into the exact tax relief and exemptions related to your capital gains that can bring you the best benefits for your business. Contact us now!
Contact Acumenica for Specialist Accounting Services!
Are business taxes your very own, personal Mt. Everest? Do you find yourself struggling with the numbers, trying to make sense of it all?
That’s exactly where we can help.
At Acumenica, we are a team of specialist accountants who manage your finances, help with tax compliance and keep all your records up to date. Whether you are a contractor, freelancer, property investor or a small business owner, we’ll be your pillar of strength so that you can focus on what’s important - business growth.
Additionally, you will also have access to our chosen award-winning cloud software, FreeAgent, which makes financial management smoother than ever. However, if you have specific business requirements, we are also certified partners in Xero, Dext and a range of other solutions.
Contact us to find out more about how we can work with your business. You can also reach us via email at
