Why Do Businesses of All Sizes Require Tax Assistance?
Businesses of all sizes need to be clued up about tax. It’s a complex field; invoicing, VAT and digital tax are all areas to be in the know about. While it may seem time-consuming, your business must be compliant with regulations. What’s more, staying on top of these aspects of running a business can help you understand your funds better, which can inform investment and employment decisions. To help speed it up, you may benefit from making your tax processes digital. There is some great automated software available that negates the need for fiddly spreadsheets.
Monitoring all aspects of tax
In the UK, there are five main types of tax that a business pays, including the taxation that comes out of its employees’ pay packets:
- Corporation tax
- Income tax
- National insurance
- Business rates
Government policies concerning tax can change from year to year, which may cause a business’s income and expenses to fluctuate too. For this reason, it’s often wise to outsource this task to an accountancy firm or hire someone in-house to stay on top of it.
If you have already submitted your tax returns but you suspect you made a mistake, it’s a very good idea to let HMRC know. Doing this may reduce your chances of getting a penalty or result in a lower penalty than you would otherwise get if they found out.
Corporation tax for small vs large businesses
When it comes to corporation tax, the rates increase based on the size of the company. As of 2023, these rates vary from 19-25%, so you’ll need to double-check to find out which one applies to your business.
Any company based in the UK must pay corporation tax on all profits it has made in the UK and abroad. For a company based outside of the UK but with any offices or branches located here, this tax should only be paid on profits made from its activities here.
Sorting your VAT
If a business doesn’t fully understand the taxing system and the way the deadlines work, it could impact consumer purchasing and sales.
For example, you’ll need to be on top of VAT, understanding which flat rate applies to your business (dependent on the types of goods or services it offers). Your VAT returns must be filed to the relevant tax authority on an annual or quarterly basis.
With so much to understand, it makes good practice for businesses to acquire the most appropriate resources in the assistance of tax processing and compliance when filing your VAT returns.