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Business Owners Tax Planning

Business owners tax planning

 

Business owners tax planning

Business owners of limited companies face a number of tax mitigation problems that only apply to them and not the general population. Presuming you are also a director of the business you have control of money paid out to you personally and how and when those funds are paid.

Most business owners who are also directors will take a small salary and the rest of their income as dividends from the business. Obviously, this means the business has to make a profit. When a business makes a high level of profit that easily meets the needs of the directors and their families monies can be retained within a limited company for future payments. Good financial planning is essential to ensure the balance of needs are met both for the company and the directors.

There a wide number of ways of mitigating tax on both the company and the directors with the correct use of tax allowances and managing how income is withdrawn from the company.

For example, a trust can be set up to use the value of the company to avoid personal inheritance tax. We have met almost no accountants who understand how this particular strategy works.

If you also own property which is not your main residence there are considerable gains to be made by using limited companies to mitigate tax

Financial planning and discipline applied to your tax affairs is essential to generate tax savings over the longer term by looking at all types of tax being paid and potential to be paid in a given planning strategy. The strategy applied will be different for everyone but the lack of a strategy will always have a negative financial impact.

A good tax adviser who understands your short medium and longer-term goals can provide huge benefits and help increase your net worth by correct tax planning.

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