As a relatively new startup, it can be tough to juggle the demands of launching a new business venture. You will find yourself inevitably trying to wear all sorts of job role hats, from marketing manager to HR director and from financial whizz to advertising guru. The stresses of flying solo and working for yourself can seem never-ending. However, it is the money side of your business that will be the most pressing, especially in the embryonic stages. You need to ensure you have adequate funding in place, that your cash flow remains buoyant and that you don’t fall behind on any repayments you need to make. To aid in this quest, take a look at some easy ways to help you make your business more tax efficient.
Paying Yourself
In conjunction with your accountant, you can formulate a way of paying yourself a handsome and worthwhile sum without drawing a large salary. Using a mixture of salary and dividends, you should be able to formulate a plan which sees you escaping the higher tax brackets of a salary and replacing this with dividends that aren’t taxed as heavily. Keep your books up to date and your tax calculations in order, and this entirely legal way of paying yourself a wage can be highly tax efficient saving you thousands.
Lease Rather Than Buy
Instead of buying any equipment or machinery you need for your business to function, consider the option of leasing instead. For example, Foremost Medical Equipment allows their clients to take advantage of section 179 of IRS Code effectively conserving working capital. Other companies also have the option of leasing rather than buying across a range of sectors. This makes it easier for you to budget expenses as you know that one manageable payment will be leaving your business bank account each month. As you are leasing, the maintenance of the equipment or machinery is often included in the price meaning you don’t have to worry as much about forking out for repairs or replacement parts.
Working From Home
Many startups are based at home at least for the first few months before larger or more suitable premises are sought. Don’t forget that you can claim back for a proportion of your Internet usage, heating and lighting bills, and mortgage interest. Using your home as a place of work means you can claim back for these home costs if you used them while implementing your business vision, sending emails, or launching a content marketing campaign.
Talk To Your Accountant
It’s vital that as your business grows, you don’t attempt to sort out all of your legal obligations yourself. By the time you are paying VAT and seeing a significant turnover annually, you need the services of an accountant to ensure that your business venture is as tax efficient as possible. Ensure that you have a good working relationship with your accountant, hold regular meetings and ask him to explain the ways he has saved your company any tax. Knowledge is power, so it pays to clue yourself up when it comes to tax legislation.
Launching a startup can be difficult in a competitive market. However, it can be infinitely easier if you work in a tax-efficient way.
Milo Senalle
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