Do you despise paying the amount of tax you do? There seems to be tax on everything – tax on our income, tax on things we buy, tax when we fill up with petrol, even tax when we pass away! And, with the cost of living it’s made it harder for businesses to survive. Aren’t we all just fed up?
Well, I have some good news for you. Here are five ways you can save on your tax bill.
1. Charge interest
A business should owe money to it business owner. You can write off interest as a business expense on your company tax return and get a bigger tax deduction.
2. Structure your business correctly
The way you set up your business has significant implications for your business and how much tax you’ll pay. Some small businesses still trade as sole traders or partnerships, but the majority would actually pay less tax if they converted to a company.
3. Out of pocket expenses
Out-of-pocket expenses are one of the most overlooked deductions that accountants have observed, followed by motor expenses. So, save those receipts for coffee shop, lunch, parking and cell phone airtime. This will all add up at the end.
3. Travel allowances or use of a business car
Which is better? If your company buys a business car and get taxed on the fringe benefit or you personally buy a car and incorporate a travel allowance? In most situations, a travel allowance wins but this is all determined on the value of the car, kilometres, and how many kilometres is business related.
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4. Let your business pay your commission
As a business owner you can structure your members or directors salaries to incorporate commission instead of a salary. Remember no expenses are deductible against salary, other than a retirement annuity contributions, but expenses are deductible against commission income.