5 Tax-Saving Tips for Small-Business Owners
Running a small business make you feel like you’re incharge of everything that is required to run a business, such as marketing, product development, taxes and payroll. Somehow you may navigate this annual process by having some basic knowledge of the tax system but there is no substitute for a knowledgeable professional.
Under the guidance of an expert, you can minimize deductions by keeping good records and tax receipts. Few tips need to consider to get through the tax season.
With Corporate Tax caring up in 2023, adopting these practices can really help you save taxes and ensure compliance.
Tip 1 – Hire the Right Accountant
To prepare financial statements and pay your taxes is not only the duty of your accountant, if only these two services are provided by the accountant than he/she is not the right choice.
For proper tracking of income and expenses, to make sure there are no cash flow issues and to monitor gross and net income your accountant needs to work with you throughout the year. From day one work with your accountant instead of only working in specific months, close tax filing deadline.
Tip 2 – Keep Adequate Records
To ensure your tax return is accurate, keep a detailed and accurate record of your accounts throughout the year. You put yourself at risk for a failed audit, if accounts are not properly recorded. Basic Version of accounting software is recommended to overcome these issues because accounting software is easy to use, cheap, and helps track all income and expenses.
Other option to keep accounts up to date is to ensure that you collect and retain evidence of all receipts and other expenses. Set up filing system to classify receipts (e.g car costs, food and entertainment costs, capital costs etc).
In case of using your private car for business purpose, mileage of the car should be recorded properly in your diary or logbook.
Tip 3 – Don’t Overlook Carryovers
Due to restriction on certain deductions and credits, you may not be able to utilize them completely in the current year but they may permit a carryover to future years. This a one way to decrease taxable revenue. Remember to use this carryover in the future through automatic tax preparation programs or should be done by a tax expert you may hire.
Tip 4 – Change Your Business Structure
In UAE many companies operate as a group with some entities within the groups based in mainland, while other are in freezone. With Corporate Tax coming in 2023, alignment of your corporate structure to proposed UAE tax laws will go a long way to save taxes.
You should take services of a professional tax expert to make that assessment. Each of the strategic decision in this case has its own pros & cons that need to be considered.
Tip 5 – Avoid Penalties from Late Payments
This is a simple but very important tax saving tip for businesses.
You can avoid a penalty for late payments in a number of ways. By putting together, the paperwork you can avoid last-minute submissions and unexpected expenses. To cover tax payments, one should set aside expected tax liability atleast on monthly basis. These penalties add up too quickly.
For tax returns and tax rebates on small businesses, contact finnection via email at info@finnection.ae or call us at our toll free number +971 800 0120070
Disclaimer: Above information is subject to change and represent the views of the author. It is shared for educational purposes only. Readers are advised to use their own judgement and seek specific professional advice before making any decision. Finnection is not liable for any actions taken by reader based on the information shared in this article. You may consult with us before using this information for any purpose.