There are many notable tax advantages to incorporating your business. Deciding if and when to take your company to the next level should take into consideration all these implications before making it official.
A huge tax advantage of incorporation is being able to deduct business expenses that your company incurs. When you include items such as travel expenses, equipment and general maintenance costs of keeping your incorporated business running, the ability to deduct these can soon add up and leave you financially better off. Not only that, medical insurance that your employees pay or that you pay on behalf of your company is 100% deductible, eliminating a huge tax burden. Incorporated businesses may be liable to lower tax rates on your income than if you were self-employed, so it's worth doing your research.
The early stages of your business can sometimes be financially turbulent and you may experience losses. If you incorporate, you are able to deduct them from your income tax. It can offer some relief that should your income be less than your costs or you were forced to write off items sold at a loss, you are able to remove these from your tax bill reducing your overall tax liability.
Although often difficult to define, business purchases can also be deducted if you incorporate your business. These might include a work car for example, which when used for 'business purposes' is liable to have the mileage, repairs and gas expenses totaled up and deducted.
A huge benefit of incorporation is that you determine what salary you reward yourself with. These allow you to keep business income and personal salary separate, reducing the social security you are required to pay. Rather than the entire income being liable to social security tax, you would only need to declare what you took home as a personal wage. Considering self-employed individuals report social security tax taking up 15% of their income earned, it is a considerable benefit of incorporating your business.
As an accountancy firm for creative professionals and businesses, we are always interested in promoting and sharing creative works we love.
GUAP magazine is leading the way as the world’s first video magazine. The video-magazine works to document and nurture creative talent within music, fashion, the arts and business, both locally and globally grown.
Creative Industry Professionals are notoriously one of the worst for keeping on top of their taxes. The all-consuming nature of creative industry careers that often requires travelling and long-hours, makes keeping on top of taxes all that bit harder. Not to mention the complexities that can occur within tax due to cross-border trade and the unique reliefs that are available depending on profession.
It’s all too easy to get lost in your taxes as a creative professional. With often more travelling and longer hours, it can be hard to find the time and resources to properly sit down and focus on where you and your business stands in relation to the HMRC.
This article focuses on bartering- the exchange of a good or service. Bartering is extremely common for many creative professionals. For example, if you are a graphic designer and you perform a design service for a catering business in exchange for their services at an event you are holiday, this would constitute ‘bartering’.
Nationwide, it is becoming more and more difficult be granted an appropriate-sized mortgage. The number of people going self-employed within the UK is increasing every year, with self-employed workers now accounting for 15% of the working population (Jones, 2018).
There are a number of problems currently associated with being self-employed, i.e. the pension crisis and getting a mortgage. This article focuses on how to get a mortgage as a self-employed individual. Research has shown that 30% of self-employed homeowners feel that the mortgage process is biased (McDowell, 2018).
As a self-employed consultant you are likely to have several running costs and expenses. Theses costs and expenses should be taken away from your business income to work out your profits. Not all expenses are allowable for tax purposes, it is therefore important to be aware of you what you are and aren’t allowed in order to save money against tax and avoid a HMRC enquiry.
Chancellor Phillip Hammond’s release of the 2018 Autumn Budget revealed a number of changes for small business owners. Below is a brief summary of some of the changes small business owners should be aware of.
If you have stopped trading as a sole trade or you’re ending/leaving a business partnership then you must notify the HMRC. This will trigger the cancellation of your Class 2 National Insurance.
Currently there are over 2,200 families on the waiting list for Kensington and Chelsea social housing. Which compared to the 11,000 houses currently available, presents a huge issue for councils finding the families accommodation. The council has already spent its entire reserves of £230m on new housing for the Grenfell tower survivors, whom all fall into their borough.
Stamp duty is an area of much dispute and change in UK tax. Currently, you usually pay Stamp Duty Land Tax (SDLT) on increasing portions of your property’s price above £125,000 (for residential properties, like a house of flat).
The amount of Stamp Duty you owe can vary depending on whether or not the property is your first home and the purchase is £500,000.
Statutory accounts (commonly known as annual accounts) are financial reports that must be prepared and filed at the end of each financial year. For UK private limited companies statutory accounts are a compulsory part of the tax year.